Measure 118, which would impose the largest tax increase in Oregon’s history, was written in a Eugene coffee shop. If that makes you nervous, it should.

The measure would increase taxes by $6.8 billion per year, according to a report by the nonpartisan Legislative Revenue Office. It would do so by requiring businesses to pay a 3% tax on Oregon sales over $25 million annually. Since Measure 118 taxes sales, not profits, businesses would have to pay even if they had no profits at all.

You don’t need to be an economist to understand that raising taxes on an unprofitable business is a bad idea.

What should make Oregonians truly nervous, though, is that taxes on sales are passed along to buyers. Most businesses don’t generate more than $25 million in annual sales and wouldn’t pay the tax directly. However, they do purchase goods and services from companies that would pay the tax, meaning their costs would rise, and so would their prices.

If Measure 118 passes, Oregonians will pay more for virtually everything, including necessities like food, clothing, and fuel. There are no exemptions. Even medicine would be affected, giving Oregon what would be, in effect, a tax on sickness.

Measure 118 would hit Oregon businesses particularly hard. The out-of-state funders who helped qualify the tax for the ballot wouldn’t suffer the consequences, but farmers, restaurant owners, and many other Oregonians would.

Take a family farmer, for instance. The farm might be too small to pay the measure’s tax directly, but many of the products and services the farmer relies on — fertilizer, equipment, fuel, insurance, electricity and crop transportation — would likely increase in cost. Despite these higher costs, the farmer might struggle to raise the price of crops sold outside of Oregon, where they would be competing against farmers in states without Measure 118’s costly sales tax.

In a 1960 speech in South Dakota, then-Senator John Kennedy quipped that farmers buy at retail, sell at wholesale, and pay the freight both ways. Should Measure 118 pass, farmers will be buying boutique, selling wholesale, and still paying the freight both ways.

Now consider a neighborhood restaurant. It might pay the tax directly, but it also buys many products and services from businesses that would be taxed. These include food supplies, furnishings, Wi-Fi, cable TV, insurance, electricity, gas for cooking, point-of-sale systems, and more.

It’s hard to imagine a restaurant that wouldn’t be affected — yes, even coffee shops in Eugene. If you think a double espresso is expensive now, just wait.

Measure 118 would raise consumer prices and reduce business competitiveness throughout the state. So why do its proponents believe Oregonians will vote for it? Two words: Free money! The tax revenue generated by the measure would be distributed to eligible people, defined as anyone — anyone! — residing in the state for at least 200 days. This poorly crafted measure ignores a basic truth known by most middle-schoolers: There’s no such thing as a free lunch.

Oregonians have already endured three and a half years of elevated inflation. The last thing they should vote for is a costly, deeply flawed experiment that would drive up inflation even more — on essentials like food and medicine — while harming small businesses across the state.

Please vote NO on Measure 118.

By: Angi Bailey

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