You say “pay less” taxes; I say “tax cut” — but what matters is the well-being of Oregonians

Chuck Sheketoff

The Oregonian’s senior political reporter, Jeff Mapes, has taken issue with my choice of words.

In my last blog post I discussed the “$134 million tax cut” that Oregon’s wealthiest households are slated to receive in the next budget period. They will get this tax cut starting January 1, 2012, even though our state’s $3.5 billion revenue shortfall threatens schools, health and human services and public safety.

Mapes questions my calling it a “tax cut.” He admits that

in a sense it is because single filers earning more than $125,000 and joint filers with more than $250,000 in income will pay less in the 2012 tax year than they will in the 2011 tax year.

“But,” Mapes says, “in the strict sense of the term it is not a tax cut.” He gets there by comparing the tax rates in 2012 and beyond with 2008 instead of 2011, and claiming that a law’s scheduled reduction in taxes is not a tax cut:

The well-to-do will still be paying more in taxes than they did before the passage of Measure 66. And the measure never called for a permanent 11 percent rate.

With all the misleading rhetoric about Measure 66 that's been spewed for over a year it’s nice to have Mapes properly label the 11 percent rate as “temporary.” But his suggestion that reducing the 11 percent rate to 9.9 percent isn’t technically a tax cut is bizarre. The opposite of a tax cut is a tax increase, and any effort to stop the rate reduction would plainly be a bill for raising revenue requiring a 3/5 vote.

But Mapes says “toe-may-toe” and I say “toe-mah-toe.” Mapes says the well-to-do will “pay less" taxes and I say they are getting a “tax cut.”

What matters is that in 2012 taxes for the wealthiest Oregonians will go down from the present level and take millions from state coffers, even as our state finances have yet to recover from the severe battering it received from the Great Recession.

What matters is whether it makes sense that a couple with $1 million in Oregon taxable income ($83,000 per month) should enjoy a $7,750 tax cut in 2012 compared to 2011, even as the budget ax dangles over vital services that foster a vibrant middle class and protect the most vulnerable,.

What matters is that powerful lobbyists for corporations and the rich are right now pushing to reduce the income tax on capital gains so that wealthy speculators would have a lower tax rate than a secretary or a grocery clerk. Giving wealthy speculators favored status over workers creates, as a Republican governor once put it, a “work penalty” in a state tax structure.

What matters is that at a legislative hearing on Wednesday (PDF agenda) Oregonians will see that a disturbing number of legislators are prepared to side with those powerful corporate interests at the expense of middle-class Oregonians.

What matters is that when Oregonians went to the polls in January 2010 and voted in favor of Measures 66 and 67, they chose to ask those who continue to do well in this tough economy to contribute a bit more to protect schools, health and human services and public safety, services that middle class and low-income Oregonians count on virtually every day.

Putting aside purely semantic issues (“pay less" taxes vs. “tax cut”), the question today is no different than it was in January 2010: Should the most well-off, at no expense of their comfort, be asked to contribute a bit more for the greater good?

I think the great majority of Oregonians would side with the middle class and still say “yes.”

Chuck Sheketoff is the executive director of the Oregon Center for Public Policy. You can sign up to receive email notification of OCPP materials at www.ocpp.org.

By Chuck Sheketoff March 22, 2011 Posted in open discussion.