Monday, February 16, 2009

1900% Tax Hike on Beer Proposed in Oregon and Other Notes on the Economy.

Oregon has a nationwide reputation for quality beer. What do its lawmakers want to do? They want to raise the beer tax to $49.61 per barrel. KGW news reports on the proposed tax as follows.

PORTLAND, Ore. -- Five Oregon state lawmakers want to impose a hefty tax on beer and have introduced a bill that brewers say would cripple them.

Four Portland legislators joined a Springfield senator to introduce Oregon House Bill 2461, which would impose a $49.61 tax on each barrel of beer produced by Oregon brewers.

The tax would raise revenue for the state at a time when budgets are running in the red. Specifically, the bill says it would fund prevention, treatment and recovery programs for those addicted to alcohol and other substances.

The bill's language defends the tax by arguing alcoholism and “untreated substance abuse” costs the state $4.15 billion in lost earnings as well as more than $8 million for health care and nearly $1 billion in law enforcement-related expenditures.

The use of "untreated alcoholism" and "untreated substance abuse" as reasons for an outrageous tax reeks of creeping prohibitionism. The figures seem like they were pulled out of a hat or perhaps a hash pipe. Legislators can not even agree what impact the tax would have on beer prices. What is worse is the callous indifference among the bill's proponents to the impact on Oregon's lucrative brewing industry. America has a system in which states compete with each other to attract business. Oregonians should be very concerned about driving jobs out of the state to areas with a more hospitable tax climate.

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A lot of economic growth was created in the 1980's with "trickle down economics". The theory behind this was that if entrepreneurs were allowed to keep their wealth, that they would reinvest it and create more jobs.

What happens when workers have more money? Most of it will be spent on necessities. There are purchases which are postponed either by charging or doing without. Has anyone given thought to the "trickle up" effect? A well paid work force can stimulate economic growth. How do we incorporate this realisation into a strategy of encouraging business and investment?

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What impact would it have if millions of small investors could be brought back into the economy? The real damage of a guy like Bernard Madoff is that of scaring away the small investor, the factory worker or candy store owner who is fearful of being scammed. Madoff's scam needs to be not only prosecuted but studied so that the stock market can be considered safe again.

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Investing in ailing companies that are being managed back to health by specialists should become a new expression of patriotism. Such investments should be tax free like municipal bonds.

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If I know that a company treats its workers right, I go out of my way to shop there. If a company is a sweat shop operation, I avoid patronising it. Shopping can be like voting. We need to support America and support fair labour policies.

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There is a lot of room for creativity in solving our economic problems. Congress has passed a big stimulus package. No one has any idea how the money will be raised. Will it be through taxes? How much overtime will there be for people printing currency? Congress should be facilitating solutions to problems and not throwing money at them. I don't see any sign of this happening and that scares me. Sphere: Related Content

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