Two Sides to Every Story
Pat Ryan
And other simplistic lies
From out here in the Wilds of Sandy through the Oregonian to the rarified realms of the New York Times, this destructive meme dominates the current media approach to news stories.
Well kids, sometimes there is only one side to a story, and way more often there are three or four or more ways to look at an issue. Now I know that this can be complicated for our brave members of the Fourth Estate, but by golly, the fact that you got that journalism degree doesn't automatically absolve you of the need to go beyond knee jerk left/right, true/false arguments.
So-o-o-o-o-o-o-o, here's an example for your consideration:
Early in the session a bunch of Republican legislators, backed by a few Dems, came out with a plan to drastically reduce the state capital gains tax. The bill HB2574 hit me as a really bad idea. My default position on taxes is that if the dirtball in the welding shop has to pay X amount of taxes on their income, why shouldn't the same rate apply to the person who gets most of their income from stock dividends?
And sure enough, my buds at the AFL-CIO and other advocacy groups were soon touting A Rally for the Rich in their emails and on their websites. I guess this would be the other side of the argument.
But wait, last week Rep Dave Hunt (D) and Rep Vicki Berger (R) came out with another bill on the same topic, but with a slightly different spin. This bipartisan bill offers the same capital gains reduction, but requires a dismantling of the corporate kicker and/or raising the corporate minimum tax to make up for the lost revenue. (I don't have a bill number on this one yet, as it's too recent.)
I contacted representative Hunt and he brought some additional information to my attention. The states of Washington and Idaho have zero capital gains tax and If you compare Oregon's personal and corporate taxation with other states, our tax rates are comparatively low. Oregon's capital gains tax rate, however, is the highest in America. This high tax rate results in the departure (to Washington, Idaho, Nevada, etc.) of Oregonians who are anticipating capital gains.
Uh-Oh, nuance. I hate that.
So anyhow, if this news story ever makes the Oregonian or the Sandy Post, I hope that the respective editorial staff will do a tiny bit of analysis. That's what they're paid for isn't it?
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connect with blueoregon
Mar 13, '05
Pat;
Those folks moving to WA, ID, and NV also take their capital with them.
Mar 13, '05
I just find it ironic that many of the supporters of the reduced capital gains tax are also for reducing the minimum wage.
I also find it ironic that we have in the last 6 or so years given $1.4 billion in Oregon tax cuts to corporate interests for things like subsidised parking and in-company athletic facilities and we are still seeing our legislature hard at work finding new ways to cut taxes - WHEN WE DON'T HAVE ENOUGH MONEY FOR SCHOOLS AND KEY SOCIAL SERVICES!
6:16 p.m.
Mar 13, '05
Good Lord--you contacted someone? Man, that's like journalism. What are you trying to do, make us look bad?
Mar 13, '05
Representative Hunt also sponsored legislation that would capture some capital gains tax revenue for a rainy-day fund. Now that sounds like a pretty darn good idea.
5:09 p.m.
Mar 14, '05
Chuck Sheketoff did some good research to negate this worry that people are leaving just simply to avoid paying capital gains taxes. And as someone taking a short break from a whole day of corporate tax returns (the deadline is March 15th), I assure you that several ways to avoid capital gains altogether come to mind.
Section 1031 like kind exchange. Conversion to personal use. Rolling assets into a retirement account. Gifting partnership & corporate shares/interests. Installment sale.
Oregon levies a high rate because it lumps capital gain income with everything else. The bill you mention would separate it out and tax it at 4.5%. Not a bad proposition, but just bad timing. It shows bad prioritization.
But as Chuck would argue, any economic stimulation we keep in the state from lowered capital gain rates would not compare to the loss corresponding revenues.
6:14 p.m.
Mar 14, '05
OK. Here's the specific bill that Reps Hunt and Berger are pushing as opposed to the earlier HB2574. This one's HB3114.
It specifically requires an increase in the corporate minimum to offset lost revenue, without any reference to theoretical gains that might come to the state due to the change.
8:15 p.m.
Mar 14, '05
HB 3114 is Oregon's version schizophrenia.
It reduces capital gain rates down to 5.5% over a four year process. But the corporate minimum tax would actually turn into something of a Business and Occupation tax like up in Washington.
This bill makes the corporate tax dependent upon gross sales in OR and it would make a company grossing over $500,000 pay $1,000 a year.
That same company in Washington would only pay $690 per year. This a terrible tit for tat. We would keep businesses here who might like the reduced capital gains, but we would definitely push light industry across into Vancouver (and I know some people I would consult they do that), while at the same time it would reduce income from capital gains and increase revenues through the corporate minimum tax.
And why wouldn't someone just have a partnership and avoid the corporate minimum tax altogether? Hmm.
The best way to tax a society is to levy tax on sectors of business considered as comparative advantages and to levy taxes differently on the different individual economic groups.
But what do we do in this state: We give the most tax breaks to the timber and ag industries and we lump 70% of taxpaying Oregonians into the 9% tax bracket. We are on the opposite side of where we need to be.
10:22 a.m.
Mar 15, '05
Pat Ryan writes: "My default position on taxes is that if the dirtball in the welding shop has to pay X amount of taxes on their income, why shouldn't the same rate apply to the person who gets most of their income from stock dividends?"
Pat, leaving aside your two grammatical errors in this sentence, I'd point out that you also make a factual error (now there's an impressive, hard-to-execute trifecta!)
Dividends are not capital gains, and ARE taxed at the same rate as the welder's income.
Mar 15, '05
I corresponsded with Rep Hunt on this, and his concern is the flight of wealthy Oregonians. I can understand this, but....
states without income tax will not tax capital gains, of course. I believe that income tax is the fairest, most progressive way to collect taxes [the progressivity is born out by data comparing Oregon and Washington tax and fee payments versus income level]. If a state uses the income tax, then I agree with Pat that income earned on asset appreciation should not be taxed at a lower level than wage income.
Sometimes systemic problems must override what seems fair, but if OCPP's analysis holds, fleeing capital gains is not a major problem. My guess is that there are a small number of wealthy folks [who, therefore, are also likely to make major political contributions] who complain about Oregon's capital gains tax rate. That kind of squeeky wheel is often greased.