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Oregon lawmakers are planning for more cuts and looking for more cash as they face the worst predicted budget shortfall in decades. Possible hikes in taxes and fees are under discussion, on things from beer to gas to car registrations.
Income tax provides the vast majority — around 70 percent — of Oregon's budget. Several bills proposed to raise more revenue now would increase taxes on people earning six figure salaries. Another would introduce what most policy makers say is still against Oregonians' DNA: a sales tax!
Salem watchers give low odds to the sales tax proposal. After all, it's been suggested before. And a bipartisan task force on revenue restructuring decided not to back it in its final recommendations, after a poll showed it would fail with voters as usual. Co-chair Lane Shetterly explained a lot of the task force's thinking in an online chat late last year. Here's part:
I have supported the sales tax in the past, and believe a well-structured sales tax (or other type of consumption tax) could have advantages over our current revenue system. Having said that, the task force recognizes that a sales tax has been rejected by voters — by wide margins — every time it has been proposed, and current voter attitudes do not show any warming to the idea. So rather than propose something voters would almost certainly reject, we focused on other options that we thought would improve our revenue system and gain public support.
Nonetheless, his task force co-chair, Republican Senator Frank Morse, is sponsoring legislation that includes a sales tax. His vision: add a 5 percent sales tax, cut the capital gains tax in half, and substantially reduce Oregon's income tax. He says the burden on people with low incomes could be offset by a bigger earned income tax credit and rent relief. He predicts the whole package would create jobs and lower the tax burden on people who currently pay taxes because a sales tax would pull money from people who aren't taxed now.
Last month Morse told me the state is not well served by its current system. He said:
My background was in business, and I enjoyed the opportunity to be a chief executive officer. I believe the fundamental responsibility of leadership is to build a foundation. And that foundation, it has to be stable, it has to be adequate, and it focuses on finance. And I believe as a legislator that's probably one of our fundamental responsibilities. How do we build a foundation for this state that will carry it forward for decades and decades and minimize these valleys that we go through by increasing the stability of our revenue system, and that will actually create jobs and stimulate the economy. That's my passion and that's my interest. But oh is it so hard to have that discussion in this legislative process.
Meanwhile, across the Columbia, Democratic Senator Rosa Franklin wants to lower the sales tax and introduce an income tax in Washington, which many people there are as allergic to as Oregonians are to a sales tax. (She also encourages constituents to play around with the tax code themselves. It's a little messy, but kind of fun!)
What do you think? Is it time for a total tax makeover? Would you benefit or be hurt by a sales tax? What if your other taxes dropped? Do you believe legislators who suggest that? Why are Oregonians against a sales tax and Washingtonians against an income tax? What are your ideas for stabilizing state budgets in the long run?
GUESTS:
- Frank Morse: State Senator (R-Albany), co-chair of the 2007 Comprehensive Revenue Restructuring Task Force, and sponsor of HB 3269, which includes a sales tax proposal
- Chip Shields: State Representative (D-NE Portland) and sponsor of HB 3272, which would raise income taxes on high income earners
- Don McIntire: President of the Taxpayers Association of Oregon
- Rosa Franklin: Washington State Senator (D-Tacoma) and sponsor of SJR 8205, which would create an income tax in Washington
Tagged as: income tax · revenue · salem · sales tax · tax · washington
Photo credit: Phillip / Flickr / Creative Commons
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If you have an income generated in this state be it personal or business and you are above the poverty line you pay a flat rate tax of say 10%. That is it, you can pay more if you want to, but you can not pay less. No deductions, zippy. Tax form is just a post card. Total income, you pay 10%, done. No need for any other tax every one pays the same rate.
Then we lock the government to that amount, oh and none of this projected income they have to operate the way we do. You get paid you pay, not the other way round. This could be enforced on Salem easily. They can not pass a law or rule unless they repeal an existing one! That by itself will save a simply huge amount of time, and time is money! We already have way to many laws rules and restrictions as it is now!
The politicians and special interests will never let it happen but it simply solves the problem.
Just say NO to a sales tax!
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As a former tax accountant and one who still files a quarterly Sales and Use Tax return in Washington, I see lots of reasons to be against a sales tax.//First, as someone already noted, it's regressive. Regressive means that it taxes lower income people at a higher rate than it taxes higher income people, because people with limited incomes tend to spend everything they make, and spending is what is taxed. An income tax is fairer if it's structured properly. //Second, implementing a sales tax means answering a lot of hard questions and setting up a whole new bureaucracy. What are you going to tax? Only goods, or goods and services? Any exemptions? Baby food? Insurance premiums? As to structure, we have a bureaucracy designed to collect income taxes from Oregon residents and people who work or own property in this state. To implement a sales tax, you add a whole new dimension...new forms, new filing requirements, new auditors, a huge education program because EVERYONE in ANY kind of business becomes a tax collector. You have to reprogram cash registers, create administrative rules. Often there's a basic, statewide tax, and also local taxes that get added by every county, city and taxing authority. If you buy something outside the state and bring it in to use it, you owe a "use" tax. This, of course, is nearly impossible to enforce. //I think a better idea is to revamp the income tax so that it becomes more progressive and fair. Contrary to an earlier post, Oregon's tax is not a flat 10%, but a graduated percentage as your income increases, starting at 5% and topping out at 9%. THE problem with Oregon's income tax structure is that this "progressive" range stops at a very low level, after which the rate is a flat 9%. I think people should not pay ANY tax at some reasonable amount, say $10,000 per adult, but should pay higher rates than 9% when their income rises into the hundreds of thousands...even millions (can you imagine?) Of course, no one has the political chops to actually suggest this in the legislature, so nothing changes. //Rather than fighting a sales tax again, let's start lobbying for a completely redesigned income tax. And while we're at it, let's get off the "all taxes are bad and I don't want to pay any" kick. I don't mind paying income tax to Oregon. I love this state and am thankful for the services it provides its citizens. And I'm happy to have an income to pay taxes on.
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Hi Emily,
This is the first time I have commented. I think a sales tax would be an important part of the state's tax structure. It should, of course, be crafted so that lower income individuals and families pay only their fare share and do not pay taxes on necessities. Thus many items will need to remain untaxed.
A sales tax will benefit me in all cases, as it will enable Oregon to support the services that make this state and my life so excellent. I hope our legislators are brave and use this opportunity to make an important difference in the financing of state services.
Lynn
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Oregon taxes the income of wealthy individuals at 9%, yet we have many unmet needs in funding education, healthcare, and providing adequate public services, just to name a few. Lawmakers should go beyond just considering reducing spending levels and, as was done in the early 80's under Governor Vic Atiyeh, create a fairer tax system that asks the wealthiest individuals to invest in Oregon's future, by establishing a 10% tax bracket on incomes greater than $250k (joint).
The top 1% (earning $308k or more annually) have an effective 6.1% tax rate (state, excise, property, income, less Federal Deduction offset) while middle-class Oregonians ($27k - $71k) pay 8%, with lowest 20% wage earners paying at a 9.4% tax rate, according to The Institute on Taxation and Economic Policy. A 10% tax bracket would more even the playing field for all Oregonians.
Large "C' corporations depend upon and use state services just as individual Oregonians and small "S" corporations do, and in some instances, at a greater frequency and cost. However, two-thirds of these same large corporations, many headquartered out-of-state, with a multi-state footprint, pay a $10 minimum annual corp tax, thus burdening average Oregonians and small business owners to make up the difference. It wasn't long ago that business tax revenues represented 16% of total state tax revenues. Now that percent is 6%. It's time that we ask that these large companies pay their fair share, with (1) a substantial increase in the minimum tax and; (2) a tax at the same rate (5,7, and 9%) that individuals and small businesses pay.
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1) A flat tax has the same problem as a sales tax: it's regressive.
For those who don't understand that, here's an example:
Given: a sales or flat-rate income tax of 5%.
A makes $100. B makes $1000. C makes $10,000. Take away 5% from each:
A has $95. B has $950. C has $9500.
Each is paying the same percentage, but what's left over is what's important. The impact of A's 5% is huge. C still has plenty left though C pays 100 times as much as A.
The above is what underlies a progressive taxation system. The idea is that most people contribute, but they don't give more than they can afford.
HB 3272 is a progressive tax bill. Here's what it does:
If taxable income is not over $3,050, you pay 5% of taxable
income.If it's over $3,050 but not over $7,600, you pay $153 plus 7% of what's over $3,050.
If it's over $7,600 but not over $250,000, you pay $471 plus 9% of what's over $7,600.
If it's over $250,000, you pay $22,287 plus 11% of what's over $250,000.I think you can do the math, but the idea is, of course, that the folks who can afford to pay more, do pay more. And, if your taxable income is $250,001, you're left with $227,714. You're probably not hurting.
The estimate is that only about 8,500 of Oregon’s 1.8 million taxpayers will pay this amount, and that it will generate $220 million in revenue over the next two years.
It's only two pages. Look into it further at http://www.leg.state.or.us/09reg/measpdf/hb3200.dir/hb3272.intro.pdf.
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Part of our DNA is right! I am an Oregonian and therefore I do not pay sales tax. What part of NO do "they" not understand? Why do they continuously waste their time and energy (not to mention our tax money) even thinking about it. I cannot be convinced of the merits of a sales tax because I will not even listen.
Raise our income tax, sin tax, gas tax, whatever tax, But NO sales tax!
If you must have a sales tax, move to Washington--Seattle all the better.
A Real Oregonian
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Oregon must have a tax makeover. A regressive sales tax would hurt me because I'm a huddled unwashed mass with little hope of seeing the next sunrise. I'm getting cold. I can't feel my legs. I'm losing my mind. Dave, can I sing you a song? The song is called Daisy....
I'd prefer to see Oregon build the Oregon Endowment upon a base of several hundred billion dollars. The services governments provide would be paid for from the interest earned by the endowment.
No one would pay taxes because that's the endowment's job. There will be a few well-reasoned rules concerning how the endowment could be used. If the endowment earned too much then the excess would be retained for the inevitable rainy days that make Oregon so $green$.
Let's think outside the ballot box and set aside conventional tax approaches. I hate spending hours filling out complicated tax forms that are too easy to fill out incorrectly.
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Trurl9:
Keep your head above water! Rub your hands together to stay warm!
Also: how would we build up this Oregon Endowment? Several hundred billion dollars has to come from somewhere, right? But where?
Dave
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No sales tax. No. Never. But, what if we added a tax to certain unhealthful activities such as eating junk food? Add a nickle to each bag of cheetos, or hamburger or soft drink purchased and, believe me, the money would flow into Oregon's coffers. If obesity is becoming the number one health problem in America, and if Oregon is suffering budget constraints, why not try to reduce one and help the other?
I would also like to say we should not send out kicker checks but instead boost the rainy day fund for just these times.
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As a native Oregonian and longtime homeowner, it seems to me that Oregonians aren't against a sales tax, they're against the idea of an ADDITIONAL tax. No tax overhaul package has been presented that convinces the populace that property/income taxes will truly drop as a sales tax comes up. Given our shift from a natural resource-based economy to a more diverse economy (one dependent on tourism, tech, health care, small business, etc), a sales tax makes sense. I would vote for it, but only if it were part of a full overhaul of the tax code, not just an adjustment. Unfortunately, our lawmakers in Salem have shown that they can't work together; the partisanship of the last several decades won't bring the three-legged-stool tax approach to our state. We need people to reach across the aisle for true systemic change. A new tax approach would help everyone and I would support it, though I certainly don't love the idea of paying more for toothpaste...
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South west Washington residents who work in Portland pay an outrageous Oregon income tax along with Washington's sales tax. Now they are facing a proposed toll to get to work along with a proposed Washington income tax. What's the deal here?
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You don't like it, work in Washington. Infact why don't you listen to Washington Public Radio.
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Regarding people who live in Washington and work in Oregon: Every day when I come home I have to fight Wa. traffic to get to my house in NE portland. Either pay for Max to go to Vancouver, or stop complaining about tolls. I'm already angry that my tax dollars are going to fund a huge bridge to an ungrateful bedroom community that's too cheap to fund public transportation for its citizens.
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Oregon and Washington are different state structures. Oregon is a constistutional state and Washington is a statute state. A sales tax in Oregon would have to be changed by the people and in Washington it can be changed by the congress. So if you add a sales tax in Oregon and "reduce income and/or property tax" it would work better than what we have today.
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Imagine a tax system that shrinks government, sends building permits soaring as infill development, creates local jobs long-term, expands the tax base, increases owner-occupancy, and encourages local investment? It's been shown successfull in some 20 Penn. communities, Australia, Hong Kong, even Johannesburg!
It's incentive taxation that is proposed as a joint resolution in the Legislature. Care to know more?
It would lower taxes on improvements, similar to making whole communities into Enterprise Zones, by enabling them to adopt a split-rate property tax. This could be structured to lower tax burdens initially, so that it would eventually allow the tax base to build value that is captured in a higher site tax that doesn't wage a deadweight loss on the economy. Simple!
Kris Nelson
Geonomics Consulting 503.234.2318
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Don McIntire's ideas have been soundly rejected by Oregonians -- M47 failed in all 35 of Oregon's counties.
We have a revenue problem that calls for revenue solutions.
I don't understand why you give Don McIntire a platform given that his ideas have been so soundly rejected by Oregonians.
Frank Morse is correct that we need to be more rational and save for rainy days, and his concern about initiatives driving up state spending (McIntire refuses to acknowledge that). But each of his proposals for a sales tax is flawed. The idea of bringing in more money but "reducing the net net tax burden" doesn't hold water.
Oregon needs to put the income back into the corporate income tax on profits and tax those households with the greatest ability to pay who today pay a smaller share of their income in taxes than the lower income households.
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I favor a blend of income and sales tax. It is the only way to get people who don't pay income tax (because of not living here, or have tax income loopholes) to share the cost of running the state and providing infrastructure and services. It is also a way to "luxury tax."
People should do some numbers. Say my adjusted gross income is $30,000, I pay 7% state income tax on that, $2,100. 8.5% sales tax would mean that for $2,100 I spent $24,705 on buying stuff. No Way do I spend that much money on taxable items (since grocery food items are excluded)!!!!!!!!!!! But, my income tax is paying for people to come and shop and shop and shop tax free.
From what I understand, Washington state has a lot of different business taxes that Oregon doesn't, and one is a transaction tax. Even if we didn't have a sales tax per se, a transaction tax would be a good place to start.
Oregonians would get a tax break, because they would have others sharing the burden. Especially since there are a lot of business travellers coming to Oregon.
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Why not have a smaller amount of tax, secured by the constitution, from each: income tax, property tax, AND sales tax? That way EVERYONE pays! Also, the tourists to our state can help, too, since they use the roads and parks.
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I am happy to see this issue come up again. I frequently work with drug abusers and felons in the state and they often laugh about the current tax code. When they make money from their drug deals and from robberies they are able to spend their ill-gotten money completely under the table. They make a lot of money and spend it with no tax burden. If we had a sales tax people skating by with illegal incomes, tip incomes, and under-the-table pay would all be forced to pay their fair share since everyone has to buy food, goods, and services, no matter where their money originally comes from. This under cover income flow goes completely unnoticed under our current tax structure and I believe the common citizen grossly underestimates the amount of money existent in this under-cover economy!
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One of the unruly mechanisms of this state is that people like myself, who rent, get to vote on raising property taxes to help the zoo elephants. Why should I have a say in that?
I'd like to know why everyone in this state thinks they are so much smarter than all the other states. Our schools are in shambles, and everyone laments about our budget woes.
You know what, if live frugal, you won't get taxed as much with a sales tax, and if you want to outifit your home with 3 plasma flat screen TVs, I think you can probably afford to pay a little more taxes! Wow, that dozen eggs will cost you $3.15 instead of $3 -- Oh my God! Horror of horrors!!
Grow up, it is stubborn policy-jingoistic Oregon ego. Why is this gaping hole a point of pride?
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This is really simple...
What Oregon has been doing only works during good economic times. The rest/most of the time, we have a very hard time funding everything that should be funded in this state. Save your arguments about spending too much on this or too much on that... there isn't enough to go around no matter what your priorities happen to be.
That said, we need an integrated, stable system of taxation, and a sales tax should be part of such a system.
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So what Senator Morse seems to have sucessfully demonstrated is the biggest problem with politicians: they forget that they are elected representitives of the people, not sent to Salem to "do what they want"
I'm having my own "budget shortfalls" and I solve the problem by spending less - now that's a lesson that Senator Morse should learn.
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They're also elected to be leaders, by people who trust them to make good decisions.
That, and they do represent some of us.
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If we, as a society need to collect taxes, shouldn't we do it in the most effiecent way? a sales tax costs society the most per dollar collected. Property taxes are the most effeicent. I also beleive in a strong progressive tax system, between income tax and property tax we could have that. I also would like to defer taxes - take 1/2 my assests after I'm in a box.
Micah Hamley
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If I'm not mistaken, tourism is one of our larger industries. Consider that along with the folks driving over from Vancouver (wearing down our roads) to enjoy sales tax free purchases, and all the non-resident/unemployed students enjoying publicly funded services, parks, and roads.
Why aren't they leaving any of their money here? A sales tax would not only diversify the state revenue and protect it from cyclical trends, but also create a lot of new tax-payers!
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Good morning, I can't reply to your comment on my comment re: my child-based tax system so I'll ask here.
I don't understand what freedom of choice issues it brings up. Would you please explain (if you have time)? I don't know if I'll ever really make the time to work on it, but I'd want to take everything into consideration if I do. Thanks!
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The state of Oregon needs to look at people who live in washington state and work in oregon, but thear employeers do not withhold any Oregon income tax. this has been going on for years, 1000s of workers have not paid any income tax to the state of oregon. !!!!!
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Caveats to a sale tax - which I don't like, but feel will help share the pain - No way could the rate be raised willy-nilly, it needs to protect people who are vulnerable ie "the poor', other tax rates have to be decreased - especially the property tax. the part that appeals to me about a sale tax is that if you spend more you pay more, and that is a good thing in my opinion. No matter what we do taxws are a part of life, but I would want tight oversight, so that we the public could regain some confidence that our elected officials will "spend it well"
Cesca
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Seems like those who have money to spend (folks with more income and tourists) would pay more than their share if we had a sales tax, assuming that we have little or no income tax, and that necessities (real ones like food, diapers, etc,) were exempt. I'm still not sure why a sales tax is considered regressive - why is that?
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The Majority of those who make over $200,000 make that money through capital gains. Seriously 9% capital gains compared to 25% income tax. Why should their "income" be taxed at a rate more than half of what I am being taxed at? Instead of a sales tax, Oregon should raise the capital gains tax.
"More than 80 percent of all capital gains income went to those making more than $200,000 a year in 2006. Very few making under $50,000 would be affected by any increase in the top capital gains rate. "(Factcheck.org)It seems like a no brainer, that raising the capital gains tax would generate more money than a 5% sales tax.
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I am neither for ar against a sales tax but I do wonder why people are so opposed when most of the consumer spending over the last ten years has been funded by credit cards where people are paying interest to banks for profit. We might want to tax purchases of items we don't really need.
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First - the person who called in and lives in WA but works in OR. He likely does this to pay less taxes. He may pay income tax in OR, but not in WA, correct? And please, he's not shopping in WA and paying those sales taxes. That is disingenuous. Also, he is, of course, using OR resources.
Second - we need to increase sin taxes on all booze and tobacco products. Add fast food and we're on our way to better health. I do not favor a general sales tax.
Third - I am happy to pay my share of taxes. But as a childfree couple married 10 years, how about something like this, which will also help the environment? One-two children: tax break. Three-four, none. More than four- you pay taxes on them. Or, since we are using vastly fewer resources than people who have children, give us a tax break for *not* having children.
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Although this does raise some freedom of choice issues, I can't help but agree that your child-based tax would be a positive thing.
Good luck getting it passed though.
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How can your guest say that we shouldn't raise the tax burden on the rich in this "situation we're in," but wants to raise the tax burden on us with a sales tax?
THIS DOES NOT COMPUTE.
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Senator Morse has a point in recommending a sales tax, however the downside is that the majority of non-compliance with income tax laws, is with small business, which is not subject to third party reporting such as Forms 1099 and W-2.
Should we also entrust sales tax collection to an already noncompliant sector of the economy?
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I work for Fred Meyer, and I can tell you that implementing a sales tax would probably require minimal effort. The cash registers are already capable of adding tax. It would, however, probably cause mass hysteria regardless of the actual effort required.
In addition, working in a union environment and making very little money, I have to say I wish there was less income and payroll tax and no hefty union dues that go up more often than my pay does. After tax I make about $290 a week working full time. If there was a sales tax and more money in my paycheck, I'd probably be able to buy more necessities, even if they did cost more, because I'd start with more money and be able to budget accordingly.
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It is a fact well known among economists that a sales tax is regressive as opposed to regressive. It effects the income of the working class much more because there are no tax deductions. Five percent of a $700.00 SSI check is much more of a burden than five percent of $100K of income.
That does not mean it would be bad for Oregon or for the less affluent. It is just very important to understand this concept before deciding which way to vote.
Personally I will not vote for a sales tax because it would shift the balance of power more towards the ruling class. More people go to jail in the US than any other country and Oregon leads the pack. The war against Meth is being lost because treatment and parenting classes and pre-K education are taking a back seat to punitive action and incarceration. We have lost thousands of volunteers in Oregon due to Peter Courtney's abuse of the back ground check requirement.
Until government proves they have the skills to spend the money appropriately I will not vote for a sales tax.
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I think a sales tax is a great idea, as long as they also lower income taxes by a significant enough amount to compensate.
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I'm not usually in line wiht Don Macintire but I have to say on this one I agree with him. It's amaing to hear people like the woman caller that has 4 kids and is afraid this will double her taxes and the write in listener that has his hands over his ears that are so dead against this that they will not even listen to alternatives that may actually help them. Oregonians are in love with this novelty of no sales tax and can't see the benefits that it might bring by chaning it. I'm open to the alternatives that this group has proposed and think we should at least bring this conversation forward. Let's not make decisions based on fear.
Mickey - Independant voter, in Oregon for 24 years.
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A sales tax hurts the poor Where is this dicussion?
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Because the poor have no representative on this program.
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The question that is always avoided is:
"Cui Bono", who benefits?
Who benefits the most from the way the Oregon tax system is constructed? I suggest that the already wealthy benefit the most and they ought to be enabled to pay more of their fair share. They are the ones who can buy lobbiests and thus legislators, they are the ones who can afford to afford to be legislators while living on their capital gains, interests, and dividends. They have constructed the tax system to benefit themselves at the cost of Oregon citizens and the system ought to be brought back into a fairer balance.
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Bravo! Right now, state services are used most by the corporations and individuals who pay the least in taxes. The system is completely lopsided.
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What about restoring the "unitary tax"?
That is a tax on multinational corporations in which the portion of their business which is done in Oregon is subject to tax. Oregon's unitary tax was repealed during Vic Atiyeh's administration, with Atiyeh leading the charge. The logic then (as trumpeted by multinational corporations) was that it would encourage more companies to establish factories et al. in Oregon. That did NOT happen. And subsequent studies by economists show that the "creative accounting" practices of multinationals always ensures that they pay no taxes at all.
The real consequence of repealing the unitary tax was to shift the corporate tax portion onto individuals.
Measures 5 and 49 had the same effect. They were very badly written and had the effect of saving corporations lots of money and increasing the tax burden on individuals, most of whom make less than $50K per year.
Without the unitary tax, the unfair burden of taxes is more unfair than ever -- taxing the lowest earners at 9% is extremely onerous on low income/minimum wage earners. Raising the amount that is taxed on wealthy people and on corporations is essential to restore fairness to the tax structure.
And as for slowing the growth of government, people and corporations demand services. For example, corporations have complained mightily about the reduction in court dates -- because corporations make the greatest use of the court system -- yet they pay the least portion of taxes!
Mr. McIntyre fails to understand that services in Oregon are INADEQUATE. Our school system is INADEQUATE. In order to bring our school system up to proper standards (reduce drop out rate, improve talented and gifted programs, etc.), we do have to raise government spending and increase government taxation. Those are facts.
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I moved to Portland from Connecticut, and when I got my state tax bill I was completely stunned. In Connecticut I got more services than I do here for my tax dollar, but my taxes here are more than double what they were in Connecticut. 9% is just too high. Oregon should bite the bullet and add a sales tax and reduce the state income tax.
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Governments can only provide services with the revenue they collect from their tax payers.
As essential as how to collect the taxes is how those taxes are spent.
A review of how and what those taxes are spent on to see the tax payers get the best value for money is even more important now and to help guide the future...
I'm a State of Oregon worker...
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Even as a life-long Democrat, I fume every time government turns a "budget shortfall" into a "revenue" problem. It's a spending problem. Government spends too much money and saves too little because politicians just think about the next campaign and try to solve everyone's problems -- most of them self-inflicted by irresponsible behavior -- with government spending. I say don't change a thing. The recession is a great opportunity for government downsizing.
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I disagree strongly with Sen. Morse's notion that the burden of the red-tape created by the creation of sales tax would not be significant.
I am a small business owner, entrepreneur, running an online and physical retail business of three years. In my own experience, the absence of sales tax in the state of Oregon greatly lowered the barriers to entry for a small business like my own. I've found that it is also a source of competitive advantage for Oregon businesses as I compete with over 300 online retailers in the same marketspace, I am one of the very few that can advertise 'no sales tax'.
I participate in some online discussion forums for retailers and one of the most common problems for retailers like myself who run both online and physical stores is the tendency for local customers to come into their shops and look at everything, then go home and shop online out-of-state because if they purchase from the local store they will have to pay in-state sales tax.Creating a sales tax would place signifant costs, barriers, and competitive disadvantages on small Oregon retail businesses.
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Spinster, " Don McIntire: President of the Taxpayers Association of Oregon
says that the wealthy spend more of their tax cuts on consumption and help the economy, but in reality they just buy more companies, combine them for efficiencies and cut jobs, hurting the economy. They already spend as much as they want on consumption of anything they desire, they don't need any "encouragement".
Conservative Republican, the public is not as stupid as you think!
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I grew up in Oregon but now live in Camas, WA. So I have experienced both tax systems (as well as CA). Personally I think a sales tax works better, because it really makes you think twice before spending money on something that is more of a want than a need. Thus it encourages you not to waste money on frivolous things. Also, Oregon's high property taxes discourage people from saving to buy homes and land, which I think is a mistake.
You have to keep in mind that taxation is a form of behavior modification - whatever you place high taxes on is what people will tend to avoid. Tax property, and people will buy less property. Tax income, people will be less inclined to try to increase their income. Tax cigarettes, etc. So as a state you need to decide what you want to motivate people to do and not do.
I agree with your guest who pointed out that the tax system is minor in comparison to the recent tendency of state and (especially) federal governments to spend way beyond their means. No tax system will provide much improvement if the people in government continue to live like there is no tomorrow.
At the federal level, I believe the best answer is the FairTax. You know the tax system is hopeless when the Secretary of the Treasury cannot even figure out how to pay his taxes properly. I am an engineer, and we try to follow the KISS principle - (keep it simple, stupid). The FairTax does just that. The federal tax code is 65,000 pages long. You talked on your show about wanting a progressive tax - tell me, with a 65,000 page tax code, who is best able to avoid paying taxes, the rich or the poor?
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In a nutshell, the FairTax plan is a comprehensive proposal that replaces all federal income and payroll based taxes with an integrated approach including a progressive national retail sales tax, a prebate to ensure no American pays federal taxes on spending up to the poverty level, dollar-for-dollar federal revenue replacement, and, through companion legislation, the repeal of the 16th Amendment. This nonpartisan legislation (HR 25/S 1025) abolishes all federal personal and corporate income taxes, gift, estate, capital gains, alternative minimum, Social Security, Medicare, and self-employment taxes and replaces them with one simple, visible, federal retail sales tax -- administered primarily by existing state sales tax authorities. The IRS is disbanded and defunded. The FairTax taxes us only on what we choose to spend on new goods or services, not on what we earn. The FairTax is a fair, efficient, transparent, and intelligent solution to the frustration and inequity of our current tax system. (from www.fairtax.org)
If you are a fan of Al Gore, one of his mantras is "tax what we burn, not what we earn". I say take that one step further - "tax what we consume, not what we earn".
Find everything you wanted to know about the FairTax at www.fairtax.org
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It seems like there are a lot of 'emotional' responses to the taxation question. Can we get some real math here? Whether I 'feel' in agreement with some of the intelligent articles first posted above, I do appreciate the time, thought and real experience put in to them. Food for thought. Good job for tackling such a sacred cow, Emily, and I look forward to the discussion this creates.
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Does anybody think for the whole? "total-tax-makeover?" In tax theory there are three legs:
INCOME tax gets a skim from those who work, SALES tax gets a skim from transactions of purchase, and WEALTH or property tax gets a skim from those who own. Go where the money is!
Oregon relies on Income alone*, Oregon has one leg: income tax, and that source gets absolutely hammered in a recession. Like Now. To install a sales tax is a bit regressive , but what is not talked about is a wealth tax.
Why? That is where the money is. Who is not aware that since Reagan was elected that income has been funneled to the top? That is a function of the tax system. Fix the tax system and we will all have enough because we can trade with each other. Who can trade with someone who makes more in a day than you do in a year?
When our wealth was growing as a population and a country in the 50's and 60's the tax system worked and we ALL multiplied each others wealth..... by working. Amazing Concept.
Oregon additionally charges fees with the logic of "running government like a business" which it is not. It is unrealistic for government to charge a person whose house has burnt down for fighting the fire. Or charge the victim of a hold up for chasing the crook. Political parties are, surprise, are funded by the monied interests.
Government exists Not the benefit of the banks, I mean monied interests, but for the benefit of all. .... he dreamed.
I do not care what "party" you belong to. We are either going to be governed as a whole society, or we are going toward feudalism. The tax system is the reflection of this.
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I keep wondering what happens to ALL the Lotto, and Casino Money that was supposed to help our schools. It seems we the 'poor' are constantly being asked to pay for 'This or That Tax', most recently tobacco tax, while the politicians make higher and higher salaries. Their mouths constantly spew forth how much of a shortfall we have. We are even double-taxed on our Income taxes. I live in Washington and pay what you all do. There is no 'regulation' in Oregon of these matters.
Do we just keep listening to what the Media wants us to believe?
I really feel 'they', who reside in the top of the pyramid of power, are purposely 'squeezing' alll of us out ! Nothing has changed, in our budgets and expenses, yet we are being made to blame, and pick up the cost. There has to be an end to this madness. Everything I saved on my utilities and more, from the previous winter, got eaten completely up by the recent increases. to the point where even my reserve, saved prior to winter-- bottomed out. Do the companies care what happens to us?
It isnt about us conserving. It is about $$$! We need to question, WHY? Why is How much money we dont have, is always the top of the conversation? I think the Media hypes all of it. Remember there is always an underlying cause or agenda, when it comes to our hard-earned wages. People are poorer. jobless and homeless; yet we are pressured for more-more-more to support the wealthiest! This has to STOP this madness! NONE of these problems were caused by ANYTHING any of us have done or not done.
Better get used to it, because we are going to get dragged to the bottom. As long as people co-operate with this ridiculous chaos, that we call our leaders, it is going to get worse and worse. Wake up people!
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I forgot to mention in my last posting that Oregons Road Maintenance and Infrastructure is one of the worst States I have ever been in!
So you see, the money we freely give to the chaos, isnt even used and has never been used to repair this, YET we are all talking about the new Columbia River Bridge, and we are speeding along with Light Rail Projects that the people voted down! Where's the money coming for that?
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For the last 30 years, the people who are in charge of our governments have been trying to starve our governments of money so the governments will cease to exist and big business can run the United States and the world. Anyone can learn the details of the methods used by reading the book "Perfectly Legal" by David Cay Johnston or the book "The Wrecking Crew" by Thomas Frank. What is detailed in those books about the federal government has also been happening at the state level. We don't need a total tax make over. However, the addition of a 10% or 11% tax bracket for the wealthy wouldn't hurt. All we need to do to obtain much more money for governments is to enforce the revenue producing laws we have. Revenue producing law enforcement has almost stopped. According to the IRS, if all federal income tax payers paid according to the law, those who pay according to the law now could pay $1,500 per year less. Enforcement tools at the federal and state levels are no longer used. Not because many laws have changed but because agency policies have changed. The people in charge of revenue producing law enforcement agencies are working to reduce the amount of revenue available to governments so services that should be provided by governments can be provided by private industry for a profit. I have spoken to many legislators about this and they have done nothing. I have run for public office on this platform and receive few votes. Having been a federal tax collector, I watched these activities evolve at the federal level and have seen the effect of inactivity at the state level. Voters need to understand what is happening and require our elected officials enforce revenue producing laws. Voters need to see through the propaganda and elect public officials who will require revenue producing laws be enforced. If voters are satisfied with watching our leaders fail to enforce revenue producing laws, they will have to be satisfied watching public education, public transportation infrastructure and public law enforcement disappear.
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I second the recommendation of David Cay Johnston's book _Perfectly Legal: The Covert Campaign to Rig Our Tax System to Benefit the Super-Rich–and Cheat Everybody Else_ It's well researched and will truly make your blood boil.
My feeling is that all this talk of an Oregon sales tax is mostly pushed by higher-income people. The income tax rates do need to be reformed, though, since they haven't really been changed since the 1930's, when making 10K yearly was a decent salary. The bill proposed above could help, combined with a beefy rainy day fund fed by all the kicker money from real boom years. Adding a sales tax also creates a whole new bureaucracy to deal with its ins and outs (and is a PITA every time you go to buy something for say, 3 bucks and oops, it's really 3.15 or 3.18 or whatever).
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Frank Morse was asked how many new Department of Revenue employees would be needed if a sales tax was initiated. Between 700 and 1,000 new Oregon Department of Revenue Employees would be needed to enforce a sales tax. I base that on the fact that about 1.000 employees are now employed by Oregon Department of Revenue to enforce other revenue producing laws. If the ratio of Department of Revenue employees to state residents were to be made the same in 2009 as it was in 1990, 400 additional employees would need to be hired. In 1990, there were about 2.5 million people in Oregon. In 2009, there are about 3.5 million people in Oregon. About 1,000 employees were employed by Oregon Department of Revenue in 1990 and 2009.
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I work as a bartender/server in the Portland Airport. A large portion of my sales are to customers from other states. I am in a unique situation because my income is largely gratuities, on which I pay income tax. When an out of state customer does not tip me on their purchases, I feel like I am effectively losing money, or at least paying for their privilege to eat lunch sales tax-free. I have no problem paying my taxes, but there seems to be many situations where the system is not quite fair.
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I would trade one tax for another the State is not to be trusted look what the did recentlly (Grabed the 911 funds)
if we have a sales tax what will prevent them from rasing it whenever they want a new program? or maybe they will increase the other taxes little by little untill they are back to where they started or even higher. the state legislature has yet to meet a new program they would like to start,only the lack of funds currently stop them. all states currently have a funding problem this year. and most of them have a least one sales tax.
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I'm retired and live in NE Portland. Most of the time I shop in Vancouver, WA because I hate fighting all the traffic to get to Costco or Wal-Mart. While in Wal-Mart today the cashier mentioned the new law that was signed by the governor. Starting November 1st. if you live in Oregon and shop in Washington you will have to pay taxes on any purchases. Is this true? Is this legal? Has anyone else heard of this happening?
I've been on vacation and haven't watched any tele for a couple of weeks.
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Comments are now closed.
First, there should be no sales tax. Unless they're on both goods AND services, they're extremely regressive and just serve to shift the tax burden down the income scale. Sales taxes are always sold with the line: "it won't be levied on essentials," but last time I checked, soap, toothpaste and toilet paper were pretty essential, and those basic things are always among the things taxed. And haven't Oregonians made it abundantly clear that we don't want it? It goes down in flames by 3 to 1 margins every time we vote on it.
We should instead take all the kicker money (both corporate and personal) and put it into a rainy day fund for use in the bad times. Put limits on access to it by the legislature so that it can't be raided when times are good.