Unfortunately, but perhaps not surprisingly, the state economist’s recent forecast that Oregon faces a budget shortfall has prompted opponents of Measures 66 and 67 to peddle an obvious fallacy. It’s the post hoc, ergo propter hoc, that goes like this:
- A occurs before B: Measures 66 and 67 occurred before the May revenue forecast showed a budget shortfall.
- Therefore A, Measures 66 and 67, is the cause of B, the revenue shortfall. That’s like saying yesterday the sun came up and after that people died, so obviously the sun caused their death.
Case in point is Dan Chriestenson’s op-ed in last week’s Oregonian, “Answers aren’t easy, but they’re simple,” in which he stated:
I also argued [in the run up to the January vote] that the revenue anticipated from 66 and 67 would never be forthcoming because small businesses, the primary target of the increases, simply don't have the means to sustain the increases. They will have to downsize, retire, leave the state or simply close up shop. This past week's revenue forecast bears this out.
Now four months later, media across the state are blaring news that after passing the largest tax increase in Oregon’s history, we’re going to have less revenue . . .
I suppose that answers are “simple,” if like Chriestenson, you rest your argument on baseless, false claims of causation – a post hoc ergo propter hoc fallacy that assumes causation. (Add to that self-contradictory arguments: Chriestenson called on the legislature to “restore school funding to adequate levels, fund public safety appropriately and cut spending.” Huh?).
Chriestenson is not alone in promoting the fallacy. In the Forest Grove News Times, State Senator Bruce Starr made a similar argument , and Albany Democrat Herald editor Hasso Hering made the same claim in an editorial.
It not just simple logic that fails the fallacy peddlers. The facts aren’t on their side either.
In delivering the bad budget news, the state economist explained the reason for the surprisingly large shortfall: the economy in 2009 was in much worse shape than previously known. “We had a horrible storm in 2009,” said state economist Tom Potiowsky. “In essence, this is cleaning up the remnants of that terrible year.”
By no means was Oregon alone in this. Just about every state got “clobbered” in terms of tax collections, state economists explained.
They noted that they are unable to predict today whether Measures 66 and 67 are bringing in as much (or more) revenue than originally projected. The reason is because a great many wealthy taxpayers filed extensions, and the wealthy are the only taxpayers affected by the measures.
Despite this uncertainty, it’s clear and obvious that the measures will generate more revenue than would have been collected if they had not passed. In a post-forecast blog post offering more analysis, the Oregon Office of Economic Analysis made it explicit for those who didn’t get it, or those who try to deceive with contrived causation claims: “Without the tax rate increases the [revenue situation] would look even worse.”
Finally, I’ll note how Chriestenson’s fretting over the impact of the measures on businesses is completely misguided.
At the same time that they announced a budget shortfall, the state economists explained that corporate income tax collections are running above projections. So far above, in fact, that they are now predicting a corporate kicker in the face of this terrible budget storm. How ironic!
In sum, Chriestenson is wrong both as a matter of logic and fact.
Later this year, when all tax returns are in, we’ll know how well Measures 66 and 67 did in terms of generating additional revenue.
Even if they did not produce as much as originally projected, let there be no doubt that our budget hole would be even deeper if Oregon voters had not enacted the tax measures.