Oregon, to my knowledge, is one of two states without a sales tax. For years a small group of Oregonians has suggested that we adopt some sort of consumption tax, and recently this has included Democrats like now Congressman Kurt Schrader, and State Senator Rick Metsger, and also Republicans like State Representative Scott Bruun and State Senator Frank Morse. They argue that Oregon needs a more stable tax base, because in of situations like that we have today, in which we went from one year having a big surplus and increasing the education budget to a record level, to the next year facing a budget deficit of possibly 2.2 billion dollars, a big chunk of the budget.
I think this idea is ridiculous. A sales tax would not provide for a more stable tax base. We're seeing consumer spending plummet. Right now, it might be falling faster than income. The only true stable source of revenue is property taxes, and only because the government probably won't lower it's assessed value and so lower property taxes.
No, if we want to see a better method of taxation, I say we tax money at the source- income- rather than when it is spent. The increase in the savings rate is an indication of what we'd be seeing if we were dependent on sales taxes. We can't rely on people spending money.
I think the reality is that there is no way to stabilize revenue when a crisis hits. All we can do is our best to deal with the situation at hand. Perhaps the best thing we could do, since the state can't deficit spend, is to get rid of the kicker, and save the surplus in good years, so we can spend more during the bad.
