Oregon voters on Tuesday approved two measures raising taxes both on wealthy individuals and on corporations.

In addition to the political interpretations that will go on, there's a very interesting policy question here: how much, if any, decline in economic activity will Oregon see as a result of these tax hikes? Conventional economic theory holds that general tax hikes cause people to spend less by leaving them with less discretionary money. (I believe there may be some accepted exceptions to that rule in the case of taxes specifically targetting — and thus discouraging — unproductive economic activities, but I can't say for certain; I studied political science and not economics in college.)

Oregon's tax hikes, along with other states considering similar measures, while other states keep taxes the same, creates what economists call a natural experiment. Compare growth rates or unemployment between the tax-hiking states and the non-tax-hiking states, adjust for other variables, and see if there's a statistically significant difference.

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