By Jan Meekcoms
(Originally published in Salem Business Journal)
Oregon recently came under the scrutiny of two institutions making their annual examination of all 50 states’ economies.
In March, the nonpartisan Tax Foundation released its yearly Facts & Figures, How Does Your State Compare? Fortunately for Oregon, our lack of a state sales tax boosted our overall ranking in the Foundation’s State Business Tax Climate 2013 table to the 13th best in the nation. A property tax rating of tenth best also helped, but that is where the good news stops.
In the three other components of the table, Oregon had poor grades: Corporate Tax (31st), Individual Income Tax (32nd) and Unemployment Insurance Tax (37th).
A week or two later, the Mercatus Center at George Mason University released its Freedom In The 50 States, An Index of Personal and Economic Freedom study and found Oregon 23rd in fiscal policy (a drop of nine points from 10 years ago) and 30th in regulatory policy.
Other economic freedom indexes, such as the Fraser Institute’s and the Pacific Research Institute’s, have taken extensive measurements of each state’s economy, but Mercatus has gone to extra lengths, running them through more than 200 variables.
“State and local government spending remains high (nearly a standard deviation above the mean), which in conjunction with low taxes, makes for high (and rising) state debt,” the Freedom study notes of Oregon. “Government employment is about average, but there is fat to trim. In the regulatory realm, Oregon ranks below average. Its liability system and real property rights protection are mediocre.”
The study also finds other problems with Oregon. “Eminent domain reform could go further. Residential land-use regulation is fairly onerous … The state’s minimum wage is the highest in the country when adjusted for average wages … workers’ compensation approaching two standard deviations worse than the mean.”
The study offers some suggestions for state policymakers, such as, “Cut spending in order to reduce public debt. Reducing outlays on public safety, government employees’ retirement benefits, health and hospitals, and public welfare would bring these areas down to national averages.”
But what stood out for me in Mercatus’ Freedom study is the implied importance of small business in this or any other state, those dynamic taxpaying job-creators central to every economy in the world. Tend to their needs and employment will always be high and governments will always have the revenues they need.
But we don’t here in Oregon. As the Freedom study notes and then recommends, “Occupational licensing is excessive while licensing fees and educational requirements are extremely high … Eliminate occupational licensing for massage therapists, funeral attendants, pest control workers, agricultural product graders and sorters, and other occupations.”
Do these and other occupations require that much state control? Of course not. Reduce or eliminate most of it and you’ll have unleashed a swarm of job-creators across the state. A good epidemic to have, even with the few bad operators all industries have.
As was so aptly put by one entrepreneur to House Speaker Tina Kotek at NFIB’s Small Business Day at the Capitol event last month, when she asked what the Legislature could do to help, “Four letters, S-T-O-P! Stop regulating us, stop taxing us, stop trying to ‘help’ us. You are killing us!”
Jan Meekcoms is Oregon state director for the National Federation of Independent Business.