A few years back, OCPP likened the idea of cutting the income tax on capital gains to a B-movie monster: a hard-to-kill ugly creature that refuses to die.
True to script, the call to cut the income tax on capital gains has resurfaced this election year in Oregon. The two main gubernatorial candidates have both floated some version of it.
And just this week the Oregon Business Association put out another complaint (PDF) about Oregon’s income tax on capital gains, painting it as bad for Oregon’s business climate. OBA’s claim comes on the heels of the tired argument we heard during the campaign on Measures 66 from opponents such as venture capitalist Bob Wiggins that the measure “will discourage investment in Oregon startups.”
News posted late Thursday that venture capital investments are up in Oregon in 2010 is proof positive that corporate Oregon’s continued complaints about Oregon’s income tax on capital gains stifles investments is just plain wrong:
Oregon companies attracted $106 million in venture capital during the first half of the 2010, the biggest take in four years, according to data due out tomorrow morning from the National Venture Capital Association and Thomson Reuters.
Rather than propose policy fit for a Hollywood fantasy, our candidates for governor and corporate Oregon should heed the real-world facts.
Back in 2008, OCPP noted that there’s no evidence that Oregon’s tax structure inhibits additional venture capital investment, as Oregon’s venture capital investments saw big gains in 2007. They rose to $302 million in 2007 from $153 million the prior year. And on a per capita basis, the growth in venture capital catapulted Oregon to ninth place among all states (including the District of Columbia) from 19th place in 2006. Oregon's venture capital investments per capita in 2007 were at least double those of 32 other states.
This week's story in The Oregonian about venture capital investment this year is further evidence that our tax system does not inhibit such investments.
The only things a tax break for capital gains would achieve would be to reduce the state’s revenues and vital programs and line the pockets of the wealthiest Oregonians.
Coming at a time when Oregon’s budget is already under strain, proposing a tax break for capital gains is not just a misguided idea. It’s a real monster.