Sales Tax Plan — What Politicians Purposefully Left Out

HB 2530 creates a 5% sales tax with some enticing tax cuts to capitol gains, estate taxes and personal income taxes (from 9% to 6%).

The Taxpayer Association of Oregon is open minded to any debate about tax reform (including a sales tax), but how come voters are left out of the process”¦again? The people who pay the taxes should have a say in the tax debate. Any legislation should be a referral to voters, not just because it is the right thing to do, but also because taxpayers have rejected nine different sales tax proposals in the past. The more voters express their opinion on a matter somehow gives politicians cause to ignore them even more.

The other disturbing fact is the glaring absence of constitutional protections to keep the sales tax from growing. In 1970 the average sales tax rate was 3.25%, 1980 it rose to 4%, 1990 to 5% and 2004 to nearly 6%. The politicians can promise that the tax is revenue neutral, but it is only a promise and history has already proven otherwise. Without constitutional protections against raising the sales tax or local governments swarming to hitch on their own local tax — this sales tax idea is a tax disaster waiting to happen.

Finally, since Oregon is already in the top spending states per capita in the nation and our budget is about to grow a whopping 20% — shouldn’t the politicians’ chief concern be spending reform before tax reform. No tax system invented by man can truly keep up with the unsustainable and unjustified spending spree we are witnessing.

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  • Steven Plunk

    Now is the time for each of us to contact our elected representatives and kill this thing before it gets momentum. Like Jason said, we have voted down a sales tax nine times! Yet these people claim to be the people’s representatives.

    Our present system will work if the overspending will stop. We don’t need a sales tax, we don’t need any new taxes.

  • Jerry

    Sales tax time again? After nine defeats in a row! Talk about ADHD. These people are nuts. It has been shown again and again that the tourist revenue from such a tax would NEVER even cover the admin costs of collection, let alone add to the kitty. What a bunch of morons.
    Here is the deal. Eliminate ALL property taxes and I would support a sales tax. That way the people who are currently not paying any taxes will at least have to pay some.
    Anything else is just smoke and mirrors and downright foolishness.
    The idiots who are proposing this nonsense should be booted from office.
    What a bunch of losers.
    It makes me sick to my stomach.
    S-L-O-W L-E-A-R-N-E-R-S all of them.

    • Barry

      Hear Hear Jerry. These politicians are willing to tax us into oblivion and never once have you heard about living within our means. Here in Medford they are trying to levy and tax us into the poor house.

  • Anonymous

    I sent the following letter to my state representative this morning.

    Where to start? This morning’s Mail Tribune alerted me to your support of a sales tax bill before the legislature. My initial reaction was in line with the old adage “get the women and kids off the street, the legislature’s in session”. You see many of us fear what goes on in Salem. The more I have become educated about state history, politics, and tax policy the more I fear the legislative session. This tax proposal is an example of what I fear.

    With due respect to you and your colleagues, this idea is a bad one.

    The citizens of Oregon have voted on and rejected a sales tax nine times. As a people’s representative that fact alone should keep you from supporting such a tax. The government is here to serve the people not the other way around. By putting the needs of the state government ahead of the needs and expressed desires of the people turns that concept on it’s head. Why must Oregonians continue to endure the specter of a sales tax imposed by the legislature every two years?

    The budgetary problems are a result of spending, not revenues. Previous years increases have been bad but the Governor’s proposals for this year are absolutely irresponsible. Those programs are unsustainable even with a sales tax. If the legislature is looking for stability then look to control spending and creating a rainy day fund. Good solid fiscal management is just that simple.

    Promises of not raising the tax rate ring hollow. History has shown us that once imposed a sales tax is always easy to raise during a budgetary crunch and is seldom, if ever, reduced. California’s example of so many different taxing authorities and the hodgepodge of different rates from county to county is solid proof of the pitfalls of such a tax.

    Most importantly the legislature fails to understand the importance of stability in a state tax system‘s effect on the economy. Making such a change will do irreparable damage to Oregon’s economy. In my own case the unknown aspects of a sales tax will cause my business plan to change drastically. I will postpone hiring and purchases until the effects are known. Multiply such cautious moves by the number of businesses in the state and you will see what damage can be done. Playing around like this is dangerous.

    These are some of the reasons why Oregonians have rejected a sales tax in the past and why we will reject in the future. Going down this path will alienate your constituency, waste valuable time that could be used to tackle budget issues, and further the distrust between citizens and the government.

    I appreciate your service to us in southern Oregon and realize the difficulties of working in Salem. Please, reconsider your support for this and get back to the conservative principles that build a basis for the support you receive. Talk to the people of Medford, look at the history of sales taxes, and stop the run away spending that is creating this “crisis”. The people who elected you will support those moves and will be grateful for many years to come.

    Sincerely,

    Steven Plunk

  • Captain_Anon

    I would support a sales tax if other taxes were lowered as proposed AND there would be a limit on increasing it as was suggested in the article.

    A sales tax combined with a income tax provides the most stable form of revenue. there are no sudden ups and downs as we have seen because we are income tax dependant.

    We don’t need to have the populace voting on this. we are a representative democracy and we elected those in office who are discussing this proposal. that’s how it works. that’s how it has always worked. let’e be honest, the ‘people’ wouldn’t be able to make the hard decisions. people tend to be entirely self centered and self focused. and unless something affects them directly would vote it down. that’s why we have a legislative body – they look at the needs of the state, not the individual. otherwise, what’s the point of having a legislative body? we could, i suppose, do away with the legislature and have the population act as the legislature – proposing bills that every one can vote on, but that would be insane. so instead we elect officials to act on our behalf. if we dont like thier ideas, we vote them out and vote in people whose ideas we like.

  • Jerry

    But Capt. – these reps are people, too, so what is to keep them from acting in selfish ways? You sound like you would be happy on a commune.
    The people do need to vote on it – it is our money and our government. Plus, no one is looking at the needs of the state. They are looking at the wants of the state.

    Your faith in state politicos is astounding, to say the very least.

    We do not need a sales tax. There is no such thing as reducing the other taxes – it will NEVER happen. The addition of a sales tax WILL result in more money going to the wasteful state government, even by their own admission, so where are the reductions you mention? I will tell you where – in your imagination.

    • Captain_Anon

      legislatures represent thier constituents. they get voted in and out of office. its how a representative democracy works. its our system, so we live with it unless we can get a majority of people to change it. the high bar that is set for changing the basic taxing system in oregon is a way to ensure that the people, aka those who sent the representatives to salem, truely agree with the change. it’s not a simple majority that is needed. you have unnecessary government expenditures, and having the populace vote on every single thing is a complete waste of money. for one, we cant even get a majority of registered voters to the polls.

      this discussion isn’t about the *NEED* for a sales tax. it’s about a *NEED* for a stable revenue source. as we’ve seen from our state history, relying on an income tax is unwise. it’s too unstable. cutting the income tax (let the mathamaticians figure out what the rate should be to keep the tax burden on us roughly the same) would allow for a sales tax to take its place, and in turn have a more stable revenue source. the bill is calling for a reduction in income tax, that is the reduction you say will never happen.

      and as some have said, having an income tax will bring in revenue from those who visit the state. it would actually reduce the burden on the state residents. the millions of tourists who visit us don’t pay any tax into the system (other than hotel taxes and the such). the money they spend would take some of the burden off those of us who live here. it’s common sense.

      the comments you make just make it more and more clear that you’re not a reasonable person who is here to engage in a serious discussion or debate.

      if you have such deep concerns with state government, are so passionate about it and so sure that you speak for the people, run for office. then you can have an impact on these issues.

    • M Collins

      The additional administration costs to manage a new revenue source makes this the least cost effective option available. Dollar for dollar Oregonians lose. The winner with this outlook is government and only government. Bigger government. More oregonians employed by the government, the more power the government has. The most cost effective options we have are to increase the income tax rate, eliminate income tax and go solely with sales tax or my preference, focus on cutting expenses – manage our current resources.

      Being part of the private middle management sector, I’ve experienced numerous downsizings of management. We found ways to streamline and focus on value added services. Review local budgets. You will find a disproportionate number of the overall budget being that of management positions or higher. If it is so blatant in the local government, how is it with state government? Maybe through fruition, we can have “Directors” manage more than a small handful of people, as I’ve witnessed? Do you know how many budget analst positions Oregonians pay for!? WOW! I’m a controller, yes it is extreme. We spend a tremendous amount of money employeeing people to count our money. Pers – let’s move to 8% 401k contribution without a guaranteed pay upon retirement – much like the rest of us. Healthcare- let government employees pay the same as the private sector. Personally I pay $350 a month to ensure my family. Which is generous considering the company is charged over a $1,000. And just as important, Purchasing and Vendor accountability.

      There are far more cost effective options available.

  • Marvin McConoughey

    As proposed, the sales tax will help those very rich people who are sitting on a lot of capital gains and who want to avoid the nine percent Oregon income tax on those gains. The sales tax will most severely impact workers who make so little that they spend most of every dollar that they make.

    Though not emphasized in the proposal, a typical taxing authority reason for seeking any new tax system is to increase total revenues.

  • eagle eye

    Jason Williams: You say “since Oregon is already in the top spending states per capita in the nation”.

    Can you give a reference for that with some data? I don’t believe this is true any longer.

    Look at K-12 spending. Oregon is at or below national average level.

  • Jason Williams

    My source is..
    Governing Magazine Source Book 2006,
    US Census Bureau number FY 2004.

    • Scott B.

      Hey I just want to say that my good friend Jason Williams is right, this tax reform measure has to be done as a constitutional ballot measure rather than a statutory change by the legislature. The reasons for this are obvious: something this big has to be deliberated upon by and approved by the People of Oregon. Rightly so, Oregonians don’t trust the legislature to leave the rates unchanged. If the tax reform package is installed into the constitution, however, only the people can change it.

      As it stands, the bill does not do that – a bill drafting oversight. However, if the bill should make it to the House Revenue Committee, where I serve, I will be proposing an amendment to make it a constitutional referral. I’m convinced that a referral is the only thing that has a chance of passing in the legislature anyway.

      The bigger question is: should free-market Republicans be supportive of the concept? I say absolutely! It is a pro-growth, pro-investment, pro-wealth creation, pro-job creation proposal that will lower taxes for everybody in Oregon who pay taxes now. If we believe in growth and encouraging entrepreneurial investment, then this is a good idea.

      This concept will lower our (nation’s highest) capital gains taxes; it will lower our (among the nation’s highest) personal income taxes; and will lower the death tax. It is a supply-side concept that I hope would make Ronald Reagan and Jack Kemp proud.

      I know the biggest complaint: why don’t you just lower the cap gains and income taxes without creating a consumption tax? Great idea! And if we supply-side Republicans had any control of state government, we could do that (it must be nice in Utah and Idaho!).

      But since we live in Democrat-controlled Oregon and until we can win back majorities in the House and Senate, the best we can hope for is “revenue-neutral” tax reform. And I think that’s OK because we can still lower taxes for people who work and invest, and we can encourage economic growth and wealth creation in Oregon despite the current make-up of the legislature and governor’s office.

      Rep. Scott Bruun

  • eagle eye

    So do you have a link with up-to-date data?

    Look, what you say is hard to believe on the face of it. K-12 spending is the biggest part of the Oregon state budget. It is no longer on the high side.

    Then pray tell what categorie(s) of expenditure put Oregon among the “top spending states per capita”?

    Yeah, one is what is typically called “Trust Fund Expenditures”. That is pension payouts, mostly. Those payouts are not current pension contributions, and that is not money that can be touched.

    But where are data on current government expenditures for real programs?

  • eagle eye

    For some real data, try:

    https://www.ppinys.org/reports/JustTheFacts.html

    If anyone has better, more recent data, I’d sure like to hear about it.

  • Mr. Accountant

    Uhhh,

    Sorry to state the obvious, but I’m a working person and tired of flipping the bill for a lot of people in this state who get off light, most notably the Californians who make tourism #2 in Oregon. I’m a registered republican so please join me in not allowing my fellow republican’s from destroying this bill. Do the math… if you work for a living, you will pay less net taxes with a sales tax in place versus soleley an income tax. Why allow the state to only screw the working man. But don’t take my word for it, trust the rest of the United States who do have a sales tax. We’re the idiots, not them.

    • eagle eye

      Dear Mr. Accountant:

      Sorry to sound as if I support Jason Williams, but I do have to ask a question. Will this bill raise or lower the tax bill for the typical Oregonian? As I understand it, the income tax will only be lowered from 9% to 6%, while the sales tax will be 5%. Sounds like a way to increase state revenue to me, aka hike taxes. Westlund’s plan a while back was similar, explicitly aims to increase state revenue. With this feature, it will never fly, if passed by the legislature, will be voted out in a referendum.

  • Mr. Accountant

    Mr. Williams,

    Please stop the sensationalism. A good republican is concerned about spending, true. But, we should all be concerned about lowering our personal tax liability. This bill achieves that for most of us…. lower cap gains, lower income taxes. Please take another look. This is a good bill and it is time. The sales tax spreads the burdon to EVERYONE. As a republican, I love that. Seriously, take another look. Consult your accountant if you have to.

  • Jerry

    Your tax bill will be more under this “plan” unless you never buy anything. Figure it out. Cars, boats, campers, etc. Big ticket items will instantly put you back in the high tax paying bracket. It is a dumb idea – plain and simple – and we have been through all this 9 times. Don’t any of you remember?
    And Oregon leads the nation in wasting tax dollars. I grew up in Ohio and I can tell you that there are FAR more services in Ohio for your tax dollars.
    And K-12 spending? What a joke. Check our graduation rate if you really want to pour more money down that rat hole.
    Geepers, creepers, you guys in favor of this tax are all nuts.
    And remember, the tourists are NOT going to add to our coffers. It has been estimated again and again that the out of state sales tax receipts will not even cover collecting the money.
    If you are all so anxious to give more of your money to the state – just go ahead and send them a check. Leave us out of it.

  • Captain_Anon

    First of all, where are your facts to back up all your theroies? Ohio gets WAY more services for less money? tourists won’t add to the revenue stream? is that because they don’t shop, eat, or travel through oregon? what studies show time and time again they won’t? furthermore, how many people buy a boat, car, or camper every year? how much tax would that be anyway? have you dont the math? as in other states, sales of those items don’t stop. and typically, those who purchase such items tend to be in higher tax brackets anyway. i paid roughly $3200 in state tax last year. for my purchases to equal that with a 5% sales tax, i would have to have $64000 in purchases. there’s no way unless i bought a crazy expensive car to be even close. to be reasonable, let’s say that half that would come from income tax and half from sales tax. that still means i would have to make $32,000 in purchases to equal half the tax burden i have now. what percentage of the population does that? and if it were like washingtons sales tax, food items would be exempt. i don’t see that as being a problem here.

  • Steven Plunk

    A number of interesting issues have been raised in the discussions here. Each one is deserving of responses.

    We do elect representatives to a legislative body to make decisions rather than have a direct democracy. The key word here is “representatives”, they represent our interests, not the state government’s interests. Given that we have rejected a sales tax nine times I hardly see this as representing the constituent’s interests. This tax bill is part of a pattern of bills meant to take power away from citizens and consolidate power with the government. Curbs on initiative powers and the convening of the legislature every year instead of every two years are the main examples.

    The call for stable revenues ignores a very important fact, the economy isn’t stable for Oregonians. Why should government enjoy a luxury the citizens do not have? It makes perfectly good sense that when Oregonians are making do with less that the government would make do with less as well. In order to stabilize revenues the state would have to take a higher percentage during economic downturns. That makes little sense at all.

    A sales tax in a tax on the poor. The poor in Oregon pay little or no income tax but a sales tax would be tacked on to clothing purchases, household items, furniture, and many other items so a person who used to pay no state tax would now be paying a substantial percentage of their income to thet state. When you are poor a $100 is a substantial amount and it only takes $2000 worth of purchases to get to that point.

    The tourism trade already pays it’s tax through gas tax and lodging tax. The concept that we’re not bleeding the tourists is wrong. A sales tax would simply take money away from the private sector and give it to the government. Tourists have a budget and that’s what they spend while in Oregon, if taxes take 5% of that budgeted money then less money goes to the retailer selling them goods. Why is that so hard to understand?

    Businesses spend huge amounts on equipment and supplies every year. This tax comes out of Oregon business before a profit is secured. An income tax comes out of business after a profit is earned meaning the company can afford to pay a tax then. Taking it before will make it that much harder to stay afloat. Why tax struggling businesses out of existence?

    In a year where the Governor has proposed increasing state spending nearly 20% I hardly see this as an appropriate issue for the legislature. Not known for their ability to understand the law of unintended consequences I expect them to act before they think and then try to cobble together fixes in the years to come. Of course that’s after irrepairable damage has been done to the economy.

    I urge all conservatives, indeed all Oregonians, to speak out against a sales tax and push the legislature into the business it needs to attend to.

    • Captain_Anon

      While i disagree with most of what you said, i appreciate your polite, intelligent, and reasonable response

  • Marvin McConoughey

    In post #5, Jerry writes “this discussion isn’t about the NEED for a sales tax. it’s about a NEED for a stable revenue source.”

    Let’s examine that proposition. We live in a real world that is dynamic and unpredictable. The global norm for incomes both private and public is instability. Most of us cope. Oregon has a reasonably good tax system now. The fact that tax revenues rise during good times, as now, is acceptable so long as our legislators exert the modest intelligence required to save money in good times to cover the bad times. I do that, don’t you? The fact that tax revenues fall during bad times is another way of saying that hard pressed citizens and businesses get a bit of tax relief when incomes fall. Isn’t that what a compassionate government should allow?

    The present tax system does put pressure on our governments to find economies and efficiencies during bad times. That, too, is a positive outcome of our present tax system, which does not promise stable revenues.

    However, some reader may be able to find a state where both government and citizens are exuberantly joyous with their tax system. Let us know where those states are.

    • eagle eye

      The government in Oregon save money? Are you kidding? Both the right and left are profligate here. The left spends all the money they can when times are good. The right (and here I include the people who voted for it in an initiative) spend it with the kicker. Between them, there’s not a chance of having a reserve fund, as any sane state would do and as most in fact do.

      Hard times as the way to make the government exercise responsibility? That kind of sounds like the way incompetent households operate. It doesn’t have to be that way.

      Other states do it better? Yeah, a lot of them do.

  • Jerry

    I said the sales tax was based on wants, not needs, to be clear here. I do not support the sales tax.
    The only good thing about it is that it does require the poor to pay some tax.
    They now pay no taxes.
    That is the only redeeming quality to the sales tax.
    I wonder why the bleeding heart libs are so for a sales tax knowing that it will hurt the poor.
    Maybe they really don’t care about anything except revenues and bigger government.
    Steve makes a good point – we have defeated it 9 times. How representative is it to try again?
    Capt Anon just doesn’t get it. To him all politicians are wonderful, trusting people, who know what is best for the rest of us.
    Dream on.

    • Captain_Anon

      Times change, as do circumstances. And that is why there is a very large consensus to alter the taxing system in oregon – from both republicans and democrats; conservative and liberal. An sales tax was defeated in the legislature 9 times. i’ve heard that. can you name the years? It has occurred over what, 50 years? i think it’s fair, and reasonable to say that times have changed, and circumstances have changed. and considering the dismal condition of the state sine 2000, a new look is appropriate. when you buy a car, and were you to have it for 50 years, you would certainly upgrade it dependant on circumstances and technology. the same as with our laws, including taxes. Our federal constitution has been changed 27 times. so times change, as do how we govern. our state is completely dysfunctional. “if you continue to do the same things, you get the same results.” it’s time for a change.

      • Marvin McConoughey

        “there is a very large consensus to alter the taxing system in oregon – from both republicans and democrats; conservative and liberal.”

        I respectfully disagree. It will be easy to find dissatisfaction with our, or any other, tax system. But I see no very large consensus for change, and zero consensus on what and how to change.

        States differ, and I believe that we Oregonians have a right to arrive at a societal viewpoint regarding a state sales tax that differs from the views of other states. The nine votes against a sales tax during our state history suffice to demonstrate a public preference that merits far more respect than it gets from politicians.

        As a child I read trashy novels where the heroine would softly murmur “no, no, John,” as the hero leaned in for romance. Nowadays, we understand that when a lady says “no” that her words must be respected. Oregon’s citizens deserve the same minimal respect. If we are repetitively harassed sufficient times, then someday, a costly campaign will slip through a sales tax. The imposition of a sales tax will not be a genuine public desire, but a form of manipulation. The same form of public manipulation that sales tax fanatics are now embarking upon.

  • Jason Williams

    In reference to my Oregon-big spending numbers. I didn’t link to the source chart because it is a book that requires paid entrance.

    Governing magazine is the source and is primrily a government employee/govermnment manager magazine.
    link below to where you can get the book,
    https://www.governing.com/

    As to sales tax, I repeat what I said before, no tax reform should begin without putting in safegaurds for the taxpayers.

    • eagle eye

      Well, I’m not going to buy a book. But go to the source I linked to above, you can find out for free that Oregon is no longer a high-spending state in real categories of spending like K-12 schools. Here is that source and another one, less easy to navigate but very full of data. I think they both use the same data though, and the data you refer to.

      https://www.stats.indiana.edu/sip/
      Excellent US Census data on ALL states

      https://www.ppinys.org/
      Public policy Institute of NY – excellent source on state statistics
      https://www.ppinys.org/reports/jtf2004/stlocalspending.htm

      Frankly, before I’ll believe anything about Oregon being a high spending state, I need to see data.

  • Jerry

    They will NEVER put in safeguards. Trust me on that one.
    The money grubbing idiots. I have had it with the lot of them.
    State gov in OR is out of control. OUT of control totally.
    I can not effectively explain my sadness with the situation in Salem. It is very hard to deal with. These politicos are simply nuts.

    • Captain_Anon

      So being as you are so completely dissatisfied, trust no one in government, don’t believe in the system anymore and can’t deal with it. what are your options? what are your solutions to fix the problem? being grizzled and name calling doesn’t help anyone out. it doesn’t bring solutions. How do you propose to solve the issues at hand?

  • John Fairplay

    I wish I understood better what people think they mean – and whether they realize what they will really get – when they talk about adding a sales tax for revenue “stability.” The proposal before us will indeed “stabilize” revenue, provided you mean that it will still grow, but more slowly, in good times, and will still fall, but not as fast, during bad times. If anyone here remembers the 1990s, government revenues grew more quickly than at any time in Oregon history. If we had had the proposed revenue system at that time, the amount available to the Legislature to spend would have been less than it was under the current system. Do you all remember the bitching and moaning about how there was not enough money for education, not enough money for health care, not enough money for waste, fraud and abuse during that period? The reason this plan cannot work as advertised is because it will generate less money over time than the current system generates and for the Governor and his Legislature, too much is not enough.

    • eagle eye

      All the “bitching and moaning” in the 1990s was because Measure 5 had pulled the rug out from under the schools, if you remember. You could argue that the schools aren’t very well run, but that datum is something you can’t leave out. People wanted to cut taxes, they did, without cutting services, that is going to lead to trouble, it did, duh.

      The sales tax would smooth out revenue fluctuations. That is one good thing to say about it.

      • Captain_Anon

        and important to the functionality of a state.

  • Jerry

    Capt Anon:
    I would solve the problems by advocating for less government, less taxation, less of everything that is bad and wrong, which is government.
    Oregon does not need any additional revenue. They simply need to use what they have for effective, smaller state government.
    That is my solution. No name calling. Just reduce, eliminate, tear down, make smaller, get rid of, etc.
    I only wish it were possible.

  • Mr. Accountant

    This notion that Oregon is a “Big Tax” state is bull. Do a google on comparison of state tax burdons and there dozens of sites you can check. Oregon ranks between about 28th to 38th depending on the site. In comparison to our Western neighbors, that’s Colorado west to the pacific, we are certainly “Mississippi” West. We are a poor state…. bottom line.

    About the sales tax, here’s an example. Net Income of $125K, itemized deductions of $25K = 9% Oregon tax on $100K. Ignore exemptions and credits in this example. So that’s $9,000 of tax on my income. Under the new plan, my income tax would be $6,000 at 6%. About the sales tax… there is no sales tax on my food, my mortgage, my investments, my donations, my savings, etc. What does get taxed? WalMart, Home Depot, Olive Garden. How much do I spend there a year? Let’s say $25,000… so sales tax on that would be about $1,250 (at 5%). Therefore, my total tax is $7,250 which is substantially less than the $9,000 I would have currently paid.

    If this is a better deal, why does it work if our burdon is less? Well, everyone has to pay instead of just the working man. Even our precious government retirees who don’t pay any state taxes.

    I love a sales tax…. it’s a better deal for most of us!!!! But don’t take my word for it, the math doesn’t lie.

    • Marvin McConoughey

      “Oregon ranks between about 28th to 38th depending on the site. In comparison to our Western neighbors, that’s Colorado west to the pacific, we are certainly “Mississippi” West.”

      We are a poor state…. bottom line.” Oregon is relatively poor compared to California and Washington. Our state taxes are about average for our state per capita income. However, we also have a lucrative–for the state and vendors–state sponsored gambling program. Thus, state revenue is considerably larger on that count alone than is shown by considering only formal taxation.

      “About the sales tax, here’s an example. Net Income of $125K, itemized deductions of $25K = 9% Oregon tax on $100K. So that’s $9,000 of tax on my income. Under the new plan, my income tax would be $6,000 at 6%.” You urge readers to “Ignore exemptions and credits in this example.” No, I shall not ignore exemptions and credits, because they have a material impact on net tax rates.

      “About the sales tax… there is no sales tax on my food, my mortgage, my investments, my donations, my savings, etc. What does get taxed? WalMart, Home Depot, Olive Garden.” That is a major flaw in most sales tax programs, including the present proposal. Why should a rich person be exempt from sales taxes on lucrative investments when a poor person must pay a sales tax on every tire, door knob, toothbrush, etc. that he or she buys?

      “everyone has to pay instead of just the working man. Even our precious government retirees who don’t pay any state taxes.” Unfortunately, not all bear an equitable burden under most any sales tax that I have read about. Poor folks must spend most of their dollars while rich folks invest much and then defer taxes. When they die, their wills enable the profits to be passed on tax-free to their heirs. That very major problem appears to continue on under the sales tax proposal.

      “I love a sales tax…. it’s a better deal for most of us!!!! But don’t take my word for it, the math doesn’t lie.” No comment.

  • Jerry

    Yes, sales tax is better because the poor finally pay something.

  • Mr. Accountant

    Some more facts for you…. The tax foundation estimates of State and local taxes ranks Oregon #36 in the United States. They also rank Oregon #46 for Business Owners Share of the tax burdon. What does that mean? As a state, we’re in the lower 25th percentile on tax collection. But because business gets big breaks in the state, hence the 46th rating, the individual pays a heavier burden. At any rate, the notion that Oregon is a big tax state is completely and totally FALSE!

  • Jerry

    Mr. Accountant – remind me not to consult you when I do my taxes. If our state is so business friendly tax-wise, as you assert, why are we ranked 31st in the nation in the Forbes best states for business? Hmmm, maybe something is wrong here, very wrong, because according to you, with our low, low, low business taxes, we should be booming with new businesses crashing at our gates. I wonder why that is not the case. We should be in the top ten at the very least.
    Your notion that we tax businesses too low is completely and totally FALSE, to paraphrase a great accountant.
    I guess you don’t own or operate a business in Oregon – if you did you would not have made such a comment.

    • Captain_Anon

      i would suggest that the dismal quality of our schools plays a BIG role in business deciding where they want to move. what does Forbes say is the reason we’re ranked 31? that would be interesting to know for sure.

      • Chris McMullen

        Of course, all it takes is pouring more money into an already inefficient, corrupt and broken system. Then our education system will be perfect, right Cappy?

  • Mr. Accountant

    The Forbes rating isn’t tax based. The real issue with business taxes in Oregon isn’t structure based it’s business itself. Let me explain. The largest public corporation headquartered in Oregon is Nike… who is the 2nd? Exactly. The largest private corporation is Jeld-Wen… who is the 2nd? Exactly. My point is, we don’t have the large coporations adding tax dollars from profits to the revenue base. Back in the day when Oregon’s economy was resource based (lumber), we had those big corporate bucks staying in the state. Willamette Industries is an example (corp sold, and no longer headquartered in the state). We replaced those resource based industries with the likes of Intel. A nice company employing hundreds and hundreds of Oregonians, but the billions Intel makes in profits are centered at their headquarters in California. Intel is a nice story, but we need Oregon companies, not Oregon divisions of an out-of-state company. Those divisions tend to be very cyclical, and have a marginal effect on the economy. But the Nike’s and Jeld-Wen’s are the true treasures… I wish there were many more. So to answer the question, we rank so low because we just don’t have the corps and our small business owners just can’t close the gap. Look at Exxon… profit of $66 Billion, wouldn’t it be nice if they were HQ’d in anywhere in this state.

    DISCLAIMER: For you folks that are sensitive, and overly technical, my comments above are for illustration purposes only. Yes, there is apportionment between the states for the likes of Intel, and yes that does generate state tax revenues, but the Lion’s share of the dollar made resides squarely with the corporate HQ, as does the tax revenues. Hence our poor showing nationally…..

  • Mr. Accountant

    Why the bashing on the schools? I volunteer regularly at my local school district and have even been a board member on a foundation that helped support schools. A lot of this talk about waste is just perception. Having worked with the districts, I can tell you that the waste and broken schools perception is really just that, a perception. Honestly, I think the perception is fueled by the kids who fail at school whom typically are the by-product of a failed family. They kind of go hand in hand and they get all the press. But the schools themselves seem to have real quality and be lead for the most part by real professionals. Just think of the logistics of running a district with dozens of schools and thousands of kids. All for about $115K which is what a superintendent makes. In industry, a person with that level of responsibility would pull down much more money. I can think of an example right now of an individaul who works at a large mail-order place, has about 20% of the responsibility, yet makes over $300K a year. Go figure. I once confronted a man who was furious about the “waste” in the school district. Almost becoming hostile with his emotion. When he finally was able to verbalize his rage, he was angy that the schools left the lights on at night. We were kind enough to explain to him that was done at the suggestion of the police to deter break-ins. New construction of a 3,000 sq. ft. home has more waste in it than a school does in a year.

    • Captain_Anon

      No, you’re right. much of the perception of government is just ignorant opinions. few on this board actually know what goes on in the schools, what their budgets are like, or how much more efficient they are from even 5 years ago. but it’s ‘in’ to attack government on this boad, and that includes schools.

  • Marvin McConoughey

    Mr. Williams states “The other disturbing fact is the glaring absence of constitutional protections to keep the sales tax from growing.”

    That bothers me not at all, Mr. Williams, for if our present constitutional absence of a sales tax is overcome, our untrustworthy legislators will certainly find ways to increase any adopted sales tax. Do we not already have a provision requiring biannual legislative gatherings? Behold! We now have a “trial run” to see if annual meetings will be better. Will they be better? The future decision by self-regarding legislators is as predictable as rain in an Oregon winter.

    If legislators were to feel squeamish about future increases to a sales tax, why then they can resort to a sales tax surcharge, or an expansion of the sales covered, or contrive an emergency, or discern a public desire, such as some faithless legislators already profess to believe.

  • Crawdude

    The results of cramming this tax down the peoples throats will again result in a statewide initiative that will once again over turn the legislature. If the government thinks this tax change is a good idea, put it on the next ballot, tell the people why it’s a good idea (and make it a good argument this time, please!) and let them vote on it. If it’s crammed down our throats, many people will vote to repeal it that otherwise might have supported it. It’s the fiercely independent Oregon voter that will make the final decision , don’t take them for granted.

    I personally would vote for a sales tax if all the income tax was deleted and a bill inserted in the Oregon Constitution stating that no income tax local or state wide could ever be re-instated. As for the plan I’ve read about in the papers…………….no chance of me voting for it but I will vote to repeal it if forced on me.

    • Captain_Anon

      how is it ‘cramming’ if those we purposely vote into office on campaigns addressing this issue propose legislation and then vote for it?

      • Marvin McConoughey

        Captain_Anon asks an excellent question” “How is it cramming (the sales tax) if those we purposely vote into office on campaigns addressing this issue propose legislation and then vote for it?”

        1. Oregonians did not vote for a sales tax. Ben Westlund did powerfully advocate a sales tax as part of his aborted campaign for the governorship. Ben Westlund got clobbered and has now changed political party.

        2. Most voters vote on a constellation of candidate characteristics and advocacies. In the recent election, national political events also affected state level voting. I know of no winning state candidate who made support for a sales tax the central feature of his or her candidacy. Exceptions may exist, and if so, please provide the winning candidates’ names.

        3. The “cramming” includes a large and highly sophisticated effort to insert a sales tax into a broader package of tax changes whose net impact will be to spare multimillionaires from paying the present rate of state taxes on massive capital gains. I reject any attempt to argue that Oregonians in any way, shape, or form, intended by their voting to support a sales tax. The inference is false and unfair.

  • CRAWDUDE

    Thank you Marvin, it would appear the good Captain believes that our politicians need to save us from ourselves.

    The Oregon Constitution clearly states that any attempt to raise the income tax must come from the popular vote of all Oregonians.

    Though it doesn’t specifically mention the same about a sales tax. The precedent set by the constitution would bring one to believe that the raising (or lowering) of a state wide tax of any sort should also be voted on by the people. By mincing legalities and not giving the people the chance to vote they doom their plans to defeat.

    If it’s such a good idea tell us why and we’ll vote for it. I personally feel that they don’t believe it’s a good idea and can’t figure out how to snow the people into voting for it.

    Get rid of the income tax and go to a straight 8% sales tax. Of course they’ll lose all the border state business, income taxes collected from people that work here and live there and we’d find out that our tourism doesn’t produce what they say it will. Dual taxes will be wasteed just like a single tax, why double our pain? Fix the spending problems first! This isn’t New Jersey……….it’s Oregon!

    • Marvin McConoughey

      Oregon gains valuable economic benefits from not having any sales tax. Besides the attractiveness to tourism, we get extensive cross-border shopping from our neighboring states. No one has yet documented the value of having simpler financial transactions by reason of not having a sales tax. We are spared the large state bureaucracy that goes with monitoring and enforcing sales taxes.

      Evidently, our freedom from a sales tax is not seen as a problem by citizens of other states. They are voting with their feet to come to Oregon.

  • Xehanort

    ”Destiny is never left to chance”

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