The debate on Oregon sales tax is economically fundamental in defining the scope of its economic status. However, like any other economy, Oregon sales tax provides a tool for the government income as well as influencing the scope of earnings by the producers and sellers of the economic outputs. Fundamentally, the country went into an economic recession in the year 2001. Due to the effect of the same economic recession, the current debate is to provide grounds with which taxpayers would be returned their excess revenue through taxation rebates as per the 1979 law. (http://www.gtconnect.com/articles/2006/03/02/news/oregon/thuore00.txt)
Sales taxes are important sources of government income for the country since its 2001 recession. Through the legislative debate which seeks to provide a total of $650 million as taxation rebates to the various taxpayers of individual as well as corporate capacity. Economically, the taxation debate provides structures for various economic implications. At one level, since the economy is at recession, tax rebates stands in being a potential approach with which the country can revive its economy. The debate is allied to providing tax rebates to the corporations and individuals each of which provides components of sales tax through commodity consumption (individual level) and production (corporate level). This is an important tool if the expansion of the Oregon economy is never to be compromised. Through such rebates, the cost of production for the corporations through the diverse array of resource inputs is reduced. This is through structures that help to redefine the manner with which the cost of production can be safeguarded to being at the most appropriate level. Elsewhere, tax rebates to the individual persons would help to increase their income as the suppliers of the resource inputs through employment to the corporations and as consumers of the corporate output.
With implication of economic recession, the Oregon economy can only be sustained and brought to growth and development through expansionary economic factors both in terms of monetary and fiscal policy tools. Through tax rebates by the government, this is a tool for government spending in the economy which helps to increase the income and money supply in the economy. Since the stability of the economy is defined by the stability of the circular flow of income in the economy, tax rebate would perhaps be a benchmark for providing support for adequate and optimal activity for economic growth and development. (Arkelof, 2003, 1)
Though the implication of the tax rebate would be costly in the short run to the government which is even facing deficits in its income capacity, the long run status in the economy is a status which helps to create economic efficiency. Generally, since tax rebate on sale tax is government spending, the supply of money within the economy would therefore grow in correspondence to the ratio of the government spending multiplier effect. This would imply a greater scope in its economic function. The short run implication of such sales tax rebates would therefore be huge taxation inflow from the sales tax payers when the economic activity of production and purchase of resource inputs is positively motivated. Generally, the future strength of higher sales tax can only be provided by structures that promote higher production and consumption in the aggregate demand and supply. Such rebates provide strength for the circular flow of income between the government, the households and the business corporations. (Britton, 2002, 1)
Ideally, the effect of higher sales tax to the country under the effects of recession can only be developed through expansionary fiscal policy which can be achieved through reduced corporate sales taxes and increased government spending. Through lower sales taxes, this is a reduction in the cost of production for the corporations which would thus help to build its productive capacity hence higher aggregate supply and aggregate demand. Elsewhere, through rebate (government spending), the economy is supplied with higher effect of economic threshold which increases the demand as well as the supply of commodities. The long run implication of lower taxation and higher government spending in Oregon would be higher government revenue through higher tax revenues from the future developed status of the country.
Arkelof, G, (2003) Behavioral Macroeconomics and Macroeconomic Behavior. American Economist, vol. 47.
Britton, A, (2002) Macroeconomics and History. Natural Institute Economic Review, 2002.
Corvallis Gazette Times. Archived Articles. Retrieved on 18th March 2008 from, http://www.gtconnect.com/articles/2006/03/02/news/oregon/thuore00.txt