Another quick hit from the O yesterday. Registered Democrats now outnumber Republicans by over 10K voters in Clackamas County ! Dems are up over 14% since January of 2008 and R's are down 2%. Significant shift of balance out here.

The state lost nearly a third of its revenues in 2001? Excuse me? Where do you get THAT?

Hmmm... that's what I thought I remembered, but I can't seem to source it quickly - so I've gone with a less specific statement.

Thanks.

Why did it take Westlund until 2005 (four years of George W. Bush) or so to figure out that the Republicans were controlled by the "conservative element of the party" that opposed government? Was he in some sort of coma through the Reagan administration ("Government is not the solution to our problem. Government is the problem.")?

I'm still waiting (but not holding my breath) for Allen Alley to come out with any plan other than just "cut government spending".

I'm still waiting for Westlund to come up with a tax revenue idea that's different from the regressive sales tax he was pushing back when he was a Republican.

Westlund said he has long advocated cuts in income, capital gains and property taxes and replacing the lost revenue with a consumption tax, such as a sales or value-added tax. -- Oregonian, 21 July

That's cutting into a couple of the more stable parts of the revenue system and replacing it with a sales tax, which some studies show is actually more volatile than income taxes. What a great idea for increasing the predictability of revenue.

If the problem is that the state's not bringing in enough revenue, then raise the rates of the taxes we have. But don't swallow the snake-oil claim that a consumption tax is some magic fix to income stability.

I have to agree - I am heavily against a sales tax, no matter who comes up with the plan (Republicans or Democrats). Back when the plan came up, I went in and looked at the official numbers. With a few calculations, I showed that the higher your income, the greater your savings on your other forms of taxation. But those at the bottom end of the income spectrum ended up paying more - with those who don't own a home having the highest increases.

Most people who come up with these plans have not been in the situation where a few dollars a month can make the difference between having a meal or not having a meal. Even when you exempt food and OTC medicine, there are many other items that low income people have to buy that aren't food (toiletries, cleaning supplies, clothes, diapers, and the like).

I lived with a sales tax for 22 years. I watched my sister, who was on welfare for about 6 years, barely be able to afford the necessities. Actually, if it wasn't for my parents and myself chipping in when we could, my sister wouldn't have made it.

And having been on food stamps just a few years ago, I know what it's like to be counting out pennies so that our family didn't have to go hungry or so I could buy baby formula.

There are numerous ways we can make our system better.

• We can raise the corporate minimum.

• We can do away with the kicker.

• We can make our income tax system more progressive, bringing in more funds from those at the highest income levels.

• We can cut out tax deductions for things like yachts.

• And of course we have to look at our property tax system. Why should a home valued at $275,000 have a taxable value of $142,910? I understand setting up a system where taxable rates don't skyrocket in a short period of time - but there are a lot more sane ways of doing it. A home's taxable value shouldn't be half its real value.

There are a lot of things we can look at - we don't have to make the system even less progressive and bring in more funds on the backs of those least able to afford it.

I've addressed your Washington volatility claims in previous threads ...

Saying that you don't believe Washington and California data have any bearing on Oregon doesn't address the issue.

The computer model that the Oregon Department of Revenue developed has to make assumptions about volatility based on something, JTT. And a model is only as good as the data and rules that the developers use to create it.

I don't know why people like Deckert and Schrader support the sales tax. Maybe they're taken in by projections from a flawed computer model. Maybe they're so desperate to fix the problems with Oregon's revenue stream that they'll try anything at this point. Maybe they believe the people who tell them that sales taxes are a stabilizing influence on revenue. You're the one claiming a conspiracy. All I said was that Westlund's peddling the same thing he was peddling when he was a Republican (and an independent, briefly). Neither Deckert or Schraeder are about to be elected State Treasurer.

The problem is, if it can be clearly shown that -- as in the case of California -- sales taxes are less stable than income taxes in the same state, then perhaps the theorists need to take a second look at the assumptions that went into the OTIM tax model.

The assumption in every model and news story about sales taxes is that they are more stable than income taxes. Can you -- or Westlund, or Deckert, or Schraeder -- point to any data that says that is true more often than not? Or is that assumption based on faith?

And I notice you completely ignored the part about how cutting capital gains and property taxes -- both far more stable than any sales tax or income tax -- is supposed to stabilize revenue. Surely you're not claiming that sales taxes are more stable than property taxes?

Darrel has the luxury of being able to sit back and sling barbs because he is able to debate this on a wholly academic level. It doesn't matter to him what the political practicality of the plan is; if it's not perfect he can dismiss it with a wave of his hand and demand perfection.

This has to be about the dumbest comment on my interest in this issue I've ever seen.

It's not academic at all to me if people get bamboozled into thinking that a sales tax is a more stable source of revenue than it is. If the data from Washington and California I've cited are correct -- and I, at least, am willing to consider the possibility that there might be mitigating factors -- then implementing a sales tax in Oregon may simply make a bad problem worse.

- It gives a NET tax cut to lower-income people. - It raises over $1 billion in additional revenue. - It can pass.

Only if the assumptions made in the economic model are correct. Assumptions like the sales tax being less volatile than the income tax. And the average cost of housing being about $600/month. Bullet points don't prove anything. Look at the data behind the plan before you make those kinds of claims.

Ending blockquotes.

LT gets it exactly right: "Truth is, this state needs OPENLY DEBATED system-wide tax restructuring and reform" and we all need to stop throwing tomatoes at the people coming up with the ideas (that's called an ad hominem attack).

JTT, You're the one telling me to "please stop blogging while smoking the babbling hate pipe." That's a pretty pathetic idea of an "open debate."

I'm sorry if you feel that any criticism of Westlund is verboten (again, sort of lost me on the open debate thing there). The Oregonian says that he told them himself that he has "long advocated" for a sales tax. Who cares if it's got bipartisan support if that support is based on faulty data?

JHL, Doing something isn't always better then doing nothing. I have no idea why it's "practical" to support a plan that shifts more of the tax burden onto the poorest elements of the state's population and could potentially make state revenue even more unpredictable. To paraphrase Barack Obama, I'm not against tax reform, I'm against stupidtax reform.

Personally, I'm amazed that this somehow turned into an (mostly) off-topic sales-tax conversation, when I ponied up six different topics for you all...

Actually, the information that went with the sales tax proposal specifically showed that taxes would go up for those at the lower income levels, especially if they do not own a home.

Back sometime last year I went through that information on this blog and plugged in real dollars and information about real people into that model. Those at the lowest income levels pay more, then your cuts in taxes start going up and up and then level off.

Sales tax always hits the poorest people first.

<hr/>

I never said to double their taxes and take away their kicker. I definitely think the kicker should go - it's stupid and doesn't take into consideration cuts that were made to the budget because of the low revenue predictions. It's one of the things that absolutely should be done, even if the money just goes into a rainy day fund for a few years before it is eliminated completely. Same with raising the corporate minimum tax - it's another thing that should be done.

Property taxes are going to be stickier. You can't just eliminate the law and double everyone's taxes overnight - that would hurt people almost as bad as the mortgage crisis has. But what you can do is start raising the level in stages so that at some point people are paying a more reasonable amount of their home. People in Oregon would be shocked if they moved to another state and purchased a home.

My parents pay a heck of a lot more on a $150K home than people pay here. Add in their sales tax, and they're paying more annually in comparison to their income than people here in Oregon pay. And they don't have any city taxes to pay - that's just county and schools (they're in an unincorporated area). And they don't even have the highest sales tax in that area - it's much higher in cities like Houston. Not to mention that they have to renew their vehicle's stickers every year at a cost of more than double what is paid here for 2 years.

The fact is that our state, our counties, our cities, our schools, etc. need more money. We need to do something about our roads and bridges. We need to do something about our education system. We need to do something about having too short of a school day and too short of a school year. We need to do something about physical and mental health care. The list goes on and on. Not only do these things make Oregon a better place to live, work, and play, but it also makes Oregon a better place to start or relocate a business to.

But Westlund's plan has been shown to lower the amount of money that the lowest income brackets pay.

This is what gets me time and time again. That statement is not true. For the lowest income brackets, taxes go up. That is because they are extremely unlikely to own property (thus no property tax break) and pay very little to no income tax (which means savings there is small to null). And then you tack on a sales tax.

I guess I'm going to have to go dig through the Blue Oregon archives to find the post where I took the information straight from this proposal and showed the fact of the situation. The lowest income levels see taxes go up, and as you move up the income levels, taxes go down at an increasing rate until it finally levels off.

Thank God for Google's ability to search within a specific web site...

So, here is the post I made back in '06 when we were talking about sales tax:

Posted by: Jenni Simonis | Apr 14, 2006 2:32:25 AM

I just took a look at Westlund's proposal:

The one that jumped out at me fairly quickly is the graphic that shows "Here’s the breakdown of expected savings per household each year (by household income)"

I'd like to know what the makeup of the "households" is that they're using for those income levels. The numbers might be right for a single person, a "DINK" (double income, no kids), and possibly a household with 2 adults and a child. I'm not sure it's close for those with 2 or more kids-- and we've all heard the average family has 2.x kids.

Many of them also do not own homes, so they would see no deduction in property tax. Many households at that income level rent, and a deduction in property tax just means their landlord makes a higher profit. You're extremly unlikely to see rental houses and apartments lowering their rent just because property taxes went down-- they'd just put it in their own pockets.

When comparing "total saved" to income, this is what you find:

$35K: 0.38% of income is saved $45K: 0.38% $55K: 0.49% $75K: 0.63% $125K: 0.56%

This seems to show that those at the lower income levels are seeing smaller savings than those at higher incomes.

When looking at how much is spent on sales tax, compared to income, this is what you find:

$35K: 2.22% of income spent on sales tax $45K: 2.04% $55K: 1.91% $75K: 1.73% $125K: 1.48%

Just as I've been saying all along, sales tax affects those at lower incomes more than it does at the higher incomes.

And like I said above, these "savings" figures assume you own a home and are paying property taxes. That is only true for 64.3% of Oregonians (and 56.9% of those in Multnomah County), according to the 2000 Census. Those with household incomes under $40,000 (median household income in 2000 in Oregon was $40,916) are a lot less likely to own a home. So if you remove the property tax savings from those at the $35,000 income level, they end up paying $126 more a year under the plan.

It's also not showing what would happen with those people under $35K, which is where my family (and many families across Oregon) would have been the last few years.

We pay no federal tax, little state tax, and our property tax is in our rent. So we'd be paying sales tax on some of our food (it doesn't include prepared food, which typically means that frozen foods that are already prepared, like pizza, are taxed), all of our toiletries, household items, clothes, shoes, any toys we buy our daughter, books, etc. We wouldn't see any reduction in our federal tax or our property tax (we rent an apartment).

Looking at the table, the federal/state reduction on those listed is right at about 1.9%. Going by that and the other trends available on the table provided, we'd see about a $532 decrease in state tax and about $672 in sales tax. With no reduction available in our federal taxes or our property taxes, we'd actually see an increase of $140. Even if we paid out the exact same percentage in sales tax as those at $35K (which is unlikely, as the trends above show the % increasing the lower the income goes), our sales tax would still be $621.60-- still $89.60 more than we pay now.

We need to reform our tax structure so that individuals (especially those at the lower income levels) are paying less and businesses are paying their share. And yes, as part of that we need more tax dollars coming in - which means raising taxes somewhere.

We have bridges and roads all over this state that desperately need work done. This is a huge impact on commerce in our state.

We have one of the shortest school days and one of the shortest school years - this means our students aren't able to learn as much as their counterparts in other states. They also don't have access to the technology they need to compete in today's global market. Not to mention cuts in important areas like PE, arts, music, etc.

Colleges and universities need support so that they can lower tuition and fees and add on additional space, technology, etc. Mt. Hood Community College has buildings that desperately need roof repair and other work. It also needs to expand to meet demand. And it's not alone.

Many communities need more police and law enforcement services. Fairview, for instance, does not have 24/7 police coverage. Often times Gresham, which has more than 100,000 residents, has only 7 officers on duty. Crime in many of our cities is skyrocketing, and police don't have enough resources to do anything more than take a report over the phone.

We're spending money out of our pockets everyday to pay for people going to the emergency room because they don't have health insurance. Not to mention reduced productivity in businesses, kids missing school - or even worse coming to school while contagious, etc.

Every day people complain about there not being enough police to catch criminals, not enough jail beds open, not enough substance abuse services, bad roads, etc. We can't have that unless we pay for it, and taxes is how we do that.

Which is why it's important that a group of people from all sides sits down, looks at our tax situation, and finds ways to fix it so that it is equitable and fair.

I'm not afraid to say that I think we need to raise taxes. As a matter of fact, I just volunteered to do a lot of work to get our police levy passed in Gresham, which means I'll be out there advocating for increased taxes. But I think the key is that we need to reform our entire tax structure, including getting rid of some bad rules and ballot measures. Part of that will be working to create a more equitable system so that individuals aren't carrying so much of the weight.

I never said the voters have spoken - I actually think it's been long enough that you have a lot of people who weren't voters here when M5 passed - either because they weren't old enough or just moved here. I think the time is right for us to show the public the harm M5 has caused and how we can begin to reverse that problem.

During that time, I was in Texas, and my husband was a voter here in Oregon. Taxes in this state is something we've discussed pretty heavily - especially since I come from a state with a sales tax and he doesn't.

Just because someone has been "fighting the good fight for years" doesn't mean their way of doing it is right. As I've said over and over, the official numbers that go with Westlund's sales tax plan show that this increases taxes for the poorest among us. I'm sorry, but I can't buy into any plan that does that. I cannot look a mother in the eye and tell her that her paying sales tax on those items she bought is more important than a meal for her kids.

I will also say there are plenty of things that Westlund and I agree on - this just happens to be one where we don't.

Rebates don't do you any good when you're going hungry today. That's why those who make too little to pay income tax can be exempted from paying today (and getting it back later) so that it's available when it is needed most.

And even when you exempt food, there are plenty of other items you need to buy that wouldn't be exempt - toiletries, cleaning supplies, shoes, clothes, etc.

For a family in the bottom income levels, very small amounts of money can make the difference between having food on the table and not.

Oh my god. I'm so bored. Can we please get back to a topic vaguely resembling my post?

JTT -- Ha. Funny. I suppose you must have missed the other dozen threads that got hijacked by sales-tax chatter.

But Westlund's plan has been shown to lower the amount of money that the lowest income brackets pay. Your concern seems to always boil down to the fact that the higher income brackets save MORE money. (Of course they do; they're already paying more in taxes.)

You're not serious, are you? Do you really not understand what a regressive tax structure consists of?

The Washington Department of Revenue report (written by economists, I might add) says that under their own sales tax system, the lower income brackets pay substantially more in sales taxes as a proportion of their income. As in, a household earning more than $130K/year pays a couple percent of their income in sales taxes and a household earning $40K/year pays four percent of their income in sales taxes (under Washington's system).

That's what people mean when they say a tax is regressive. It takes a larger percentage of income from people at the bottom than it does from people at the top.

In fact, if you'd bothered to actually look at the Washington study, you'd have found that they're looking at options (like an income tax) because they consider the income tax to be volatile (i.e. unpredictable) and regressive.

And no, the plan Westlund supports has not "been shown" to lower the amount paid by lower-income Oregonians. It's based on a computer model, which like all computer models is only as good as the assumption that are fed into it. If you tell it that sales taxes are less volatile than income taxes, it's going to produce results that mirror that assumption.

Predicting the future is a difficult task. I don't envy the people who have to come up with projections for state revenues. But part of the problem is that the DoR hasn't been able to accurately predict what's going to happen from biennium to biennium even with the known factors of the income and property tax revenue streams. The estimates making up Westlund's tax reform plan aren't going to be any better than those predictions, and if they make the wrong assumption about sales tax volatility, they're going to be even further off the mark.

And that fact that you suggest that doing nothing is preferable than doing something in this case makes me wonder: Were you paying attention in 2002? People were dying as they were cut from OHP because our revnues simply couldn't support them.

And making the revenue stream more unpredictable than it currently is solves this how?

Oh my god. I'm so bored. Can we please get back to a topic vaguely resembling my post?

Y'know, Kari, this kind of stuff may not affect you at all, but I remember being broke and on the edge for years.

During the Reagan Recession, which hit during my college years, I was out of work for two years. It's part of the reason I didn't finish my degree for over a decade. My father -- who was infinitely more skilled than I was at the time -- was laid off from his job and couldn't find anything else for eighteen months.

By 1991 -- after working in bookstores and book distributors for ten (non-contiguous) years, my wife and I were making the grand combined sum of $24K a year (still less than the Oregon median household income today, adjusted for inflation). We were both working full-time. We were both making above the minimum wage. And our 20s were already behind us.

I don't know what your life's been like, but I've known -- and still know -- too many people living on less than $43K/ year (half of Oregon households do) to be as blase or bored by a tax reform plan that says it's going to help them but screws them over instead.

...to be as blase or bored by a tax reform plan...

ARGH! You're so utterly, completely, and totally missing my point.

Let's try again. There's absolutely nothing in my post whatsoever about any tax reform plan of any sort.

You jerked this entire thread WAAAAAYYY off-topic. It hardly matters now, there's just a few of us left hanging 'round this water cooler.

But seriously, next time you grab a post that's NOT about the sales tax and just start yammering needlessly about the sales tax, I'm going to just delete it all as off-topic.

If you'd like to discuss the sales tax, submit a guest column. I'll gladly post it.

But seriously, next time you grab a post that's NOT about the sales tax and just start yammering needlessly about the sales tax, I'm going to just delete it all as off-topic.

Kari, your first Quick Hit or Deep Thought in this post had a link to an article from the Oregonian that quotes Ben Westlund talking about a sales tax. It's right there in the very first comment I wrote. I even took a paragraph to directly address the element of the article you had highlighted, wondering how Westlund had only recently figured out that the Republicans were controlled by anti-government crazies.

Why should I bother to submit a guest column to someone who considers what I write needless "yammering"? That doesn't give a particularly good indication that it would be worth my time.

<h2>Kind of sad that you threaten to eliminate my comments about actual issues -- even if they're not the issues you want discussed -- when you don't seem to have the same sort of issues with people writing about "smoking the babbling hate pipe," or calling people "purity trolls," or -- ew! -- "European-style socialists." It's your prerogative, of course.</h2>