Which got me to thinking, two years ago voters in Oregon approved a measure that included a temporary tax increase to 10.8 on individual income above $125,000 and 11% on income above $250,000. Those increases were to both roll back to a new permanent 9.9% bracket on anything above $125,000 in 2012. This means that the part of the state's revenue shortfall is coming from the tax roll-back.
Michelle Cole of The Oregonian had this story last month (which I missed at the time):
The drop in the tax rates for an estimated 35,000 high-income households is part of a controversial policy passed by the Legislature and approved by voters in the 2010 election. At the time, everyone agreed that the 10.8 and 11 percent income tax rates contained in Measure 66 would only be a temporary solution to help balance the state budget.
On Jan. 1, the tax rate drops to 9.9 percent for individuals who earn more than $125,000 or joint filers with incomes in excess of $250,000. That top rate is still higher than the 9 percent it was before Measure 66. But the change means state government is projected to receive about $118 million less during the current, two-year budget period.
So there is the answer I was looking for: the tax roll-back will cost the state about $118 million in revenue. Which, in a sense, is neither here nor there - the budget projections last year included this as it was anticipated and still lawmakers are anticipating a $50 to $80 million dollar shortfall.
But perhaps this will provide I little stimulus? Sadly I suspect that it will provide almost none, for the difference between this and, say, a payroll tax cut is the fact that the marginal propensity to consume from this income is very low. We would not expect this extra money to be spend, but rather saved or invested - neither of which is a big help at a time when capital is not being used for investment because of the lack of aggregate demand not because there is no cash around.