Bill gives tax raising power to local transit agencies

WatchdogLegislature Considers New Payroll Tax for Transit Agencies
By Taxpayer Association of Oregon

Despite massive spending increases by all levels of Oregon government over the past several years, the current Session of the Oregon Legislature continues to threaten additional tax increases to support even more spending. One such bill (SB 1521) would expand the ability of local transit agencies to levy a payroll tax within their jurisdictions.

In the Portland Metro area, taxpayers are already well familiar with this idea. For many years, Tri-Met has levied a payroll tax covering employers in most of Multnomah, Washington and Clackamas County. This tax – currently 0.73 percent of payroll – provides more than half of Tri-Met’s annual operating budget and siphons off wages that could have been more productively passed on to employees for their own use.

SB 1521 would double the amount Tri-Met can levy, and would also provide incentives for transit agencies in other parts of Oregon to institute excise taxes on employers. As written, the bill authorizes a direct tax on employees within a transit agency’s service area in addition to an already-existing excise tax on employers such as Tri-Met levies. The maximum allowable tax on each employer and each employee is 0.8 percent of payroll or salary for a total of 1.6 percent. The employee portion would be deducted directly from paychecks, and would apply regardless of salary level.

Transit agencies must implement an employer excise tax in order to implement the additional tax on employees.

The bill had a public hearing in the Business and Transportation Committee earlier and was referred to the Rules Committee without a recommendation from the Committee. As of this writing, no further action on the bill is yet scheduled.