Kitzhaber surprises at sales tax hearing

 Sales Tax Hearing: Ignoring voters with big tax grab to explode spending crisisKitzhaber surprises at SJR 36  sales tax hearing
By Taxpayer Association of Oregon

The Taxpayer Association was present at the SJR 36 Sales Tax hearing this week.   KGW-TV quoted  Executive Director,Jason Williams,  as saying, “This is a tax voters have already said no to nine times. It disproportionately hits seniors and the poor, and it only contributes to their spending problem.”  That sums up our feelings quite well.

However, the surprise of the SJR 36 Sales Tax Hearing came from Governor Kitzhaber (who even though he generally is open to a sales tax) took considerable time to talk about Oregon’s spending problem. His words were very opposite from the same Governor who held office 10 years ago and represents part of the change everyone is talking about.  To hear Kitzhaber say we have a “spending” problem is quite eye opening.  I showcase some of his words below in this edited transcript mixed with summary so you can read for yourself.  His words also reveal his strategic insight into passing a sales tax which is important to know.

Select comments from Governor Kitzhaber on SJR 36 Sales Tax Bill:

In the past we have arrived at solutions without engaging the electorate until we actually ask them to vote on these measures. We need to put the views of the electorate before the outcome goals. We need to better understand what the voters understand the problem of Oregon’s tax structure, so we begin to tackle a majority problem rather than starting with a minority solution. It makes sense on many levels to add a retail sales tax and use to reduce income taxes. The voters have rejected that 8 times. As A biology major I can tell you that white rats can learn faster than that. There is something about that particular tact, although is compelling to people in the Legislature ,that it doesn’t seem to move the voters to any great extent.

I consider this very important, our success is not only tied to revenue and our tax structure but also on our spending decisions. If we are going to raise additional revenue from this measure to meet our objectives, which we need, then we need to be clear on what that revenue is going to be spent on. Everything about my budget is designed to have this conversation.

Voters need to be assured of two things. First, voters need to be assured that the tax dollars we are raising are going into the classroom and early childhood learning programs. Secondly, that voters are getting results for the dollars spent.

One of the reasons I suggested changes to our government retirement (PERS) system is to meet that particular challenge. Our retirement fund lost 27% of its value in 2008 and that has created a significant increase in employer contributions. In k-12 system alone we are looking at $1,000 per pupil full in increased cost and half of that is from PERS. I think it will be difficult to convince voters to accept generating new tax revenue when a significant portion of that is not going into the classroom or important public services. The crisis in school funding and the crisis in funding child protective services is not just a revenue problem it is also a cost problem.

Summary of SJR 36

“Proposes amendment to Oregon Constitution directing Legislative Assembly to adopt sales tax at rate of five percent on sales of tangible personal property and services and use tax at rate of five percent on purchase price of tangible personal property. Requires exemption from taxes for necessities. Preempts local sales and use taxes not approved on or before November 4, 2014. Refers proposed amendment to people for their approval or rejection at next regular general election.”

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  • JacklordGod

    The only way I can see Oregonians supporting a sales tax is as a revenue neutral replacement to the income tax. Not simply as an additional tax to raise additional revenue. Unfortunately, the additional revenue argument is Kitzhabers approach here.

    That train has left the station. I simply don’t see a way for this governor or any Oregon governor to convince the people that a sales tax for the purposes of additional revenue, rather than replacement revenue for eliminating the income tax, would ever work.

    There is so little faith in Oregon government that even the concept of a revenue neutral sales tax to replace an income tax is a tough sell. Most are convinced were such a thing to be done, the income tax would shortly return, promises of its banishment forgotten before the ink was dry.

    Now the governor thinks he can sell a sales tax on sincere language? That this time people will believe “well, OK, they need more money, and nine times before I didn’t think they really did, but this time I do and am convinced they wont waste it”.

    Good luck with that one governor.

    Look, if you want to pass a sales tax, there is one way to do it that will have it voted in overnight.

    Don’t call it a sales tax, call it a profits tax.

    You want an 8% sales tax? Fine, call it a retail profits tax. Claim you are taxing the evil corporations (that worked with measure 67 where mom and pop stores got their butts kicked). Claim you are not taxing the consumer, but merely taxing that which is the people fair share of massive corporate profits.

    From there you make it illegal to line out the tax, it must be included in the price of the item. Therefore people are unaware that the tax is being charged and passed on to them. Works with oil, liquor and cigarettes right? Government makes more profit off of these products than the producer does, and who likes oil and tobacco companies?

    Chumps will eat this stuff up every time. Yeah sure, the prices of every item on the shelves goes up immediately when the tax goes into effect, but if you structure it so it goes into effect months after it is voted into place, the idiots who voted for the corporate profits tax will have long forgotten about their vote and will instead think evil corporations are simply jacking the price to soak them.

    It’s a win win situation. Hatred is generated for the producers in society, thus causing further fracturing of the culture. Revenue is produced for ever greater government.

    That’s how Kitzhaber could get his sales tax passed.

  • maximus Prime

    With Kitzhaber there are many surprises

  • bartles

    “I think it will be difficult to convince voters to accept generating new tax revenue when a significant portion of that is not going into the classroom or important public services. The crisis in school funding and the crisis in funding child protective services is not just a revenue problem it is also a cost problem.”

    Bank on it, Governor. (Or rather, don’t.)

  • Francis Pettygrove

    “As A biology major I can tell you that white rats can learn faster than that.”

    Is he dissing the voters or the legislature?

    • Steve Buckstein

      I was there, and it seemed clear that he was dissing the legislature and those who kept trying to push a sales tax on top of income and property taxes.

      I agree with others here who believe that voters will not approve any sales tax unless it REPLACES another tax, hopefully the income tax. I will testify on this at today’s follow-up hearing on the sales tax bills at 1pm in HR A.

  • Oregon Engineer

    I see no suprise in this presentation. Kitzhaber is still talking tax and spend. nowhere in the presentation did he mention balance budget, spending reduction to reduce taxes or even begins accelerating payments of the current state debt or any thing else that even remotely says fiscal responsibility. In 2008 the PERS lost 27%. since then the markets are back over 140%. somebody is lying to the public or not accounting for the increase over the past 4 years.
    No sales tax unless it repeals the income tax. One or the other not both. I have lived in states with all of the taxing senerios, Sales tax and income tax, sales tax only, and income tax only. at least when there is only one there is a chance of deducting the entire tax from the federal income. where there is both only one is deductible. in states where the sales tax is the only tax it is very nice not to file a state income tax form.
    What part of ONLY ONE TAX does Gov K not get? All he says is that the public is stupid and we need to explain it to them better.
    The taxpayers are not stupid the politicians who think so should not be in office. I have yet to understand the mentality of the voters who relected a re-tread governor to a third term.
    I miss-spoke I guess the taxpayers really are stupid. or maybe it is not the tax payers.

    • Myke

      You are sooo on the mark. Though I’m not a fan of sales-taxes, I have an even greater dislike of income-taxes. In a few words, they discourage earning. Where-as, sales-taxes encourage savings. But, NOT BOTH. Its just another means to pay for a government that the rest of us can’t access. Less is more, and there has never been a law written that didn’t take someone’s rights away.

  • Bob Clark

    Maybe Kitzhaber doesn’t want to have to run in a year when the sales tax is on the ballot (November 2014). Therefore, he is trying to defer the sales tax ballot until after his attempt at re-election in November 2014. Maybe Kotek is not cooperating because she is trying to discourage Kitzhaber from running, so as to line up Wheeler for governor in 2015. Wheeler is presently ahead of Kotek in the line for the governor’s office, and maybe she’s keen to quicken Kitzhaber’s exit.
    Senate GOP, meanwhile, are actually looking at playing ball with Kotek on her proposed tax rate hikes for corporations and others. What good are the GOP if they don’t stand at least for tax rate and structure stability? Instead, they are disloyal to the brand they say they support, that of no tax rate hikes. Shame on these GOP legislators selling out to tax rate hikes and new tax schemes.

  • schaer

    downsize government

  • kelly

    But, finally, maybe the poor would be forced to pay some tax – any tax!!!!

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