Friday, July 15, 2016

Oregon's IP-28 - Populist Taxing in a Democracy's is the Worse Abuse of Power

One reason why the United States is NOT a Democracy, but a Representative Republic, is that in a true Democracy the majority always wins - regardless if they are right or not. Some states, like Oregon, allows petitions to be voted on by all. Some petitions are good, some are bad, but some petitions work on the premise: punish those whose options are already limited to take even more things away. Imitative Petition 28 (IP-28 as it is called now) is such a petition that is a Gross Receipts tax (in Europe it would be called a VAT - Value Added Tax). The sole purpose is to "punish" large corporations who follow the rules to get even more money from them for following the rules that the State of Oregon & Federal Government have imposed on them to operate.

 

The theory goes that any large corporation never pays the cost of government services that they get - which in modern times is very little if at all. They get REGULATED and told what they can and cannot do all the time. States exist to provide services to PEOPLE - and every corporation HIRES people to run - and individual PEOPLE should be the ones who pay taxes to support OTHER PEOPLE who the state determines should get money from those who pay taxes. Though a corporation is treated like a single person under the law, it is routinely abused by government to pay for things that a regular REAL purpose would refuse to pay if they were ordered to. Routine taxes companies are forced to pay that most people never know about:

    • Federal Unemployment Insurance Tax
    • 2016 Social Security Payroll Tax (Employer Portion)
    • Medicare Withholding 2016 (Employer Portion)
    • Oregon Unemployment Insurance Tax
    • 2016 Social Security Payroll Tax (Employee Portion)
    • Medicare Withholding 2016 (Employee Portion)

       

All companies are forced to pay into these - and some taxes like Social Security is at a higher rate than a person pays. Then there are local business taxes, licenses, compliance regulations, and other hidden taxes. Some taxes, like workman's compensation, they have to pay for but NEVER get money, they pay into the fund to give to the worker! Think of workman compensation like mortgage insurance: the homeowner pays the insurance so that the bank that lent you the money will get all their money back if you default on the loan - they assume no risk and you pay EXTRA TO THEM for loaning you the money. Some taxes, like the Oregon payroll tax of 2.6%, is on the gross pay that they pay their employees yet the State of Oregon keeps repeating that corporations NEVER PAY THEIR SHARE OF TAXES.

 

IP-28 states that any corporation that has a gross income of over $25 million dollars (NOTE!! this does not mean they earn that much, it means they collected that much in gross income) is taxed an additional not waiverable 2.5% of any amount above $25 million.

 

So if a bottling plant sold $35 million worth of soft drinks to stores they would have to pay $250,000 in income taxes no matter what - the $10,000,000 gross income above the $25 million. Now since they sold it to grocery stores, THOSE stores in turn would have to AGAIN pay for those same cans at 2.5% if they also has gross sales above $25,000,000 - which of course they would (especially Fred Meyer, Safeway, Albertsons and so on).  Now those recycled cans that are collected and are sold back to a smelter means the recycler would pay 2.5%. Now when the smelter sold those new cans back to the bottler they again would be taxed 2.5%. This means, in effect, a recycled can would be taxed at least 4 times under IP-28. And due to the miracle of compounding, which is also not really taught in Oregon schools, the actual increase in prices would be around 12% - not 4*2.5 percent the way the Democrat IP-28 Backers think, for a can of soft drink.

 

Now think about how gasoline prices for cars would go up. They have almost the same distribution model except they use pipelines, wholesalers, trucks, and then the retailers. Each one would have to pay that 2.5% since the dollar amount of gasoline will always have gross sales of over $25 million. Oregon vehicles consume around 1.980 BILLION gallons a year (36 million barrels a year at $2.75 a gallon) that means at least $136,718,656 (in MILLIONs) in taxes JUST on the RETAILER portion of gas. And of course NONE of that money in taxes has to go to fixing any roads or bridges at all.

The DOT of Oregon wants to force people to pay an additional $250 to $300 a year to put in a GPS tracker on each car so they can then charge people a per mile driven. This program will cost at a cost of some $40 to $50 million a year in to operate a data center, test center, support people, IT cost, communication costs and lots of extra people to tax people driving instead of just reading the odometer at the testing station every two years. At the testing station / license renewal they could do a simple math calculation on the spot to tax them on the actual miles driven when they renew the vehicle license! DOT is so dumb here in Oregon - and the Democrat State Legislature has no clue even when told about this stupid idea that it is the best way since DOT / State really want to track every vehicle in Oregon and the simple solution is NEVER what DOT wants to do.

Now IP-28 is supposed to raise 3 BILLION dollars in new taxes a year for Oregon - and the backers think that every one of those dollars are going to come from the profits that these corporations make and the owners will just not complain and let the state take their profits so they earn less. This proves that the education system in Oregon has reached a new low of brainwashing since polls keep showing that people actually believe it. Each company HAS to raise their prices to make up for the profits that they are EXEPECTED to be made as being owners of the corporation. Even regulated utilities are expected to make a profit - and NW Natural gas has stated that if it passed they HAVE to raise rates by AT LEAST 4% to make keep their REGULATED profit at the same level it is now.

 

"A middle-income family could see an increase in costs of about $613 per year for a middle-income family, according to the report."

http://portlandtribune.com/pt/9-news/312795-191362-northwest-natural-estimates-rate-hike-if-ip-28-passes

 

Now IP-28 FIXES the threshold to start taxing. Now look up the 1912 tax law when they passed it - it stated that less and 1/2 of 1 % of all people will ever pay income taxes when they campaigned to implement Federal Income tax - and look how many have to file now (even if 40% actually do not pay Federal income tax at all).

 

This means that inflation alone will push the "present value" of $25 million actually be less and more corporations over time will be paying. Instead of maybe a 1,000 forced to pay, after 10 years that will actually be more like 2,000 and then 10 years after that likely 5,000 will be paying. The Federal Reserve system WANTS inflation to be 2.5% a year - which means your dollar LOSES 2.5% a year - and to make up for that you have to get more dollars. And, again due to compounding, that means after 4 years $100 bill has the buying power then, of what $88 has now. Another way to look at that is that a company has to have an income of $112 in 4 years to have the same profit as they do now with $100. So that in time more and more companies HAVE to pay into IP-28.

 

The last thing the backers of IP-28 state that all the money collected will be spent on schools, medical care, the "poor" and other worthy items. NONE OF THAT is really true. Due to the way it had to be written, all money goes into the "General Fund" and can be spent any way that the legislature wants to. They could spend every dollar buying up all the dams on the Snake River from the Federal Government and tear them out if they wanted to. They could spend all of it building bike paths along every road in Oregon. There is nothing to stop them from spending the windfall every year on feel good but meaningless projects. And since Oregon is a wholly owned Democrat state with super majorities - they can pass anything they want regardless of who objects and regardless that the facts support the objectors.

 

IP-28 will look good on paper in the Voters’ Guide and in all online and physical papers, but every person in Oregon, or just visiting, will pay for that "extra" 3 Billion dollars a year that will be spent by the Legislature (and you can be sure not one cent will go to pay off accumulated State debt, they will always spend it on new stuff since that gets better press than paying off any long term debt); and, they will AGAIN ask for more since it is now all gone - every year.