If you insist, as "liberals" mostly do, on raising taxes you will lose. Framing the debate in this way plays right into the hands of our enemies.

Last month in the Oregonian an article stated that there is 27 Billion in tax expenditures in every budget. Basically, these are credits, deductions and other methods (such as not not counting certain items as income) of eliminating income from taxation.

Combined with our 13 billion budget, Oregon actually has a "tax pool" of nearly 40 billion dollars.

Suppose we eliminated all deductions, credits, etc and put all income from all sources on the table? We then could have a budget of 15 billion and those of us who are currently footing the bill would see our rates go down. We could have the schools we want, the public safety we want, the decent roads we want, and those of us who are footing the bill would see our rates go down.

The issue needs to be framed not as one of increasing taxes, but of tax fairness. We don't want to raise taxes, we want to eliminate special priveleges. To show that we are not playing political games, we get rid of all tax breaks, not just those on the rich and corporations. The math escapes me, but there is no doubt that adding 27 billion to the tax pool would enable my tax rates to be cut in half, if not more. This could be sold to the voters.

Mike

I do believe in the universal refusal to guarantee anyone's private for-profit investments.

This means that any class of people, be they investors in Intel or beneficiaries of a pension trust, should bear their own risk of investment loss.

The perennial battle in Salem, and elsewhere, is characterized by one class of folks negotiating with another class to immunize themselves from capitalism. In simplest terms, one third of the public negotiates with a different third to deny yet another third any public benefit at all.

I would venture to say that if public employees did not have special status that we would also not have the army of special tax breaks for certain businesses. The politically active businesses only want to threaten to do away with special status for public employees because that enables them to negotiate for their own perks. If the special public employee status vanished then so too would the private party perks that have been extracted over the eons.

I would suggest rethinking "the politics" of revenue raising. Measure 30 was about 9 pages of text. Do any of you know someone (as I do) who thought that was just too complex and refused to return a ballot? My friend said "Why is something like that on the ballot? Don't we pay legislators to deal with such things?" Did everyone you know realize Measure 30 was put on the ballot by out of state group CSE? Would it have gotten on the ballot otherwise? What ballot measure has McIntire qualified and gotten passed in the 21st century? Is the power of the anti-taxers more apparent than real?

Do you know for a fact that if CSE (or whatever they are called now) returned to refer a legislative decision that they would get the signatures? Seems to me that is like betting today on how many cloudy days there will be in June. Things change from year to year.

There are some who want progressive ballot measures and others who want to restrict the process.

It costs nothing to have the debate. Just imagine in the multiple special sessions of 2001 someone saying "well, the Senate will be Republican forever--nothing we can do about it". That is not what happened.

I submit the first step is talking with people you know, and with your state legislators. Do they believe that the less than 700,000 voters on the prevailing side of Measure 30 made the definitive statement on taxes for the rest of our lives and those who didn't turn 18 before that vote have no right to express their own opinion? Do they believe that in districts that went Democratic in 2004 for the first time in a while no one is allowed to utter the word "revenue" because "the voters have spoken on Measure 30"?

Or are they like the woman from Ashland quoted in the press coverage of the Medford Ways and Means hearing who said "it is a shame you are not talking about more revenue"? If someone speaks in Ashland and Karen Minnis doesn't hear it, does it mean that person is not allowed to express an opinion?

Where is the legal decision that a supermajority is required in the legislature to end tax breaks? 1995's HJR 14 became that supermajority for the legislature. What is to prevent a legislative referral or a ballot measure to change that? Or to revise/ repeal Measure 5 or Measure 50?

But it won't happen if the attitude is "Just the way things are, nothing we can do about it".

Mike,

Here's the latest state report on tax expenditures from the Oregon Department of Revenue. Interesting stuff...

A few points:

First, the report is very clear about warning that it is not valid to assume that eliminating each expenditure would add that expenditure's total financial impact to the state's bottom line. So these numbers do not translate directly to "lost revenue".

Second, when you look at the specific tax expenditures that the state employs, an awful lot of them go to middle class folks (itemized federal deductions on property taxes and mortgage interest result in over $1 billion in Oregon tax expenditures per biennium). So it may be true that if all such expenditures were eliminated, and the general fund increased by almost 50%, your "rate" might go down -- it's quite likely that your total tax burden would actually increase.

On a related note, the lion's share of "expenditures" claimed here is not related to income tax exemptions, but rather property tax exemptions. This includes, per the report cited, about $9-10 billion of "expenditure" by not taxing "intangible personal property", and more than $600 million for not taxing "personal property for personal use" (like household goods, clothing, etc.) Then there's the $3 billion or so of lost property taxes from federal property in Oregon (which, under federal law, is exempt from property tax).

In short, the claims that there's a vast pool of untaxed income ripe for Oregon's picking are simply overblown. Most of the "expenditures" are from untaxed property, not income. So unless you want to start collecting taxes on clothes and furniture, or the value of retained investments, it's not a $27B untapped income tax pool -- it's more like $8-9B at most. And if you capture about half of that to make up your $15B state general fund budget, that means that a lot of regular citizens are going to be paying more in taxes to cover it.

Is there room for debate over the appropriateness of specific tax expenditures in Oregon? You bet.

Is elimination of these expenditures the way to solve our budget problems? No way.

It might work to follow Gov. Roberts' advice and recreate the Oregon tax system from the ground up. We may have to wait until the Democrats control the House, but it could work.

Essentially, at the start of the session, the legislature says to the people: Oregon's tax system is broken. It's complicated, arbitrary and unfair. We can't get enough revenue to pay our bills because we can't tax the people and institutions that should be taxed and we can't raise taxes on the middle class.

Once we're done, we will refer the whole shooting match to the voters. A no vote means we stay with the old, dysfunctional system. A yes vote means we implement the new system.

I think this could work because it shows the legislature respects the voters enough to be honest, direct and committed. It's bold enough to generate excitement. It's big enough to require the help and energy of every one in the state.

It could work.

We will create a clear, rational and fair tax/revenue system to meet the needs and goals of our citizens.

Sounds wonderful. Truly it does. Wipe the slate clean and start over from scratch.

But....

Whose needs? Whose goals? Whose definition of "fair"?

Just for example, note this bit from the original post: "Oregon has a revenue problem, not a spending problem." That is an opinion, not a fact, and it is perhaps the central point of disagreement in the state over our budget struggles. The subsequent statistics used to bolster the argument merely demonstrate that revenue has not kept up with inflation or personal income, but do not objectively demonstrate that spending should have kept up with inflation or personal income (i.e., that spending wasn't too high to begin with).

Anyhow, I absolutely agree that a complete overhaul of the tax code is in order. But I probably disagree with 90%+ of the people on this web site as to what general form a more reasonable tax system would take. And I'd be willing to bet that even if the "progressives" here could agree to a general form, they'd disagree among themselves over the details.

I don't think you can expect the people to vote on a comprehensive new replacement tax system, the details would be pretty overwhelming. Plus I guarantee that whatever the ultimate plan was, there'd be something in it for everyone to vote against.

Yet, good luck getting massive tax changes enacted by the legislature alone without inciting a taxpayer revolt.

Unfortunately, I think we're going to have to approach tax reform in Oregon on a piecemeal basis. It'll take time, and a lot of hard work, and it'll require a transition period where the tax system is unbalanced in various ways before we get to the ideal. It's not the most efficient approach, but it's probably the only practical approach.

Then we can work on a complete overhaul of the state spending system, once we've got the revenues all worked out...

For what it's worth...

I agree. Oregon's tax code needs to be revamped, but I would say to go easy on small businesses. Many of us are S-Corporations, and despite the big name, most S-corps in Oregon are quite small, as in less than five employees. If the scale were to start at $500, as you suggest, for corporations in Oregon, I can tell you right now that this year, for me, $500 would be painful. Although my biz is growing, I'm having to reinvest in order to support the growth. And in light of all the other taxes small businesses have to pay, particularly in the Portland area, I just think the scale needs to go down.

Believe me, as most of the commenters here know, I am not anti-tax, but I think that there is too much nickle and diming going on with the smallest of small business owners. We get lumped in with the small-to-medium sized businesses (about 20 - 100 employees) and it hurts, because we're not there yet, but we're having to pay the same tax and fee rates.

Oh, and forget having enough money to pay health care benefits for employees. $500... that's one month of benefits for two employees.

For the past 10 years I have looked to Salem for political courage, but not only have I not seen any "profiles in courage", I have seen no profiles.

Kate Brown seems to spend most of her time in some hole somewhere, counting her campaign money, while the Republicans just laugh and laugh.

After 10 years of flushing our schools down the drain to keep GOP fat cats happy, I say this: the people of Oregon get the schools they deserve.

Tell Kate Brown, Minnis, Hass and fellow cowards I said hi next time you see them counting their (campaign) money at the bank!

David:

I suspect that you, I and most voters would agree on much, much more than we would disagree on. I'm not a flat tax fanatic or anything, but I believe that a simple, clear tax code is what we need to solve our problems. The current system is untenable and I doubt any piecemeal fixes will make things better.

Measure 5 didn't pass because most Oregonians were idiots who wanted to strangle government. It passed because most Oregonians were frustrated with property taxes going up each year for reasons that weren't clear and a legislature that was largely uninterested in doing anything about it. They didn't understand the depth of the frustration. We’re still frustrated because M5 didn’t make things any better.

Bob MacIntire and Bill Sizemore channeled that frustration to suit their own ends. And it worked. Voters were given a clear alternative and they went for it.

I’m frustrated with the tax/revenue situation in Oregon. Most Oregonians are. Further, most Oregonians are willing to pay their fair share of taxes as long as everyone else is. We know that no real world tax system will be perfect. But we also know that our system could be substantially better. I believe that we would vote for comprehensive tax reform under the right conditions.

First, we want to be heard. It’s hard to trust the solution if no one asks us what the problem is. Second, we want to know that the legislature is actively and openly trying to help Oregonians, not special interests. Tell us why each proposal is being considered. And third, we want to see that the legislature is doing hard, honest work to craft a solution. We respect hard work.

We can channel the same frustration as Tax Payers United. And we can channel it into something good.

The end result would be blunt and unrefined, I agree. It would be the framework for starting over. There's nothing to keep the legislature from tinkering with the tax code once the broad reform is in place. That would be a great place for you to argue for exempting certain business profits and for me to argue for exempting money paid out for medical bills, as a hypothetical example.

It could work. And it would be a winner for Democrats. We could say: look, now that the obstructionist Republicans can’t block us any more, we’re finally going to solve this problem. And we’re going to do it right – from the ground up. Help us make it the best tax system in the country.

Don’t get me wrong, it’ll be a lot of work. The legislators will have to spend a lot of time in their districts listening, answering questions, and selling their ideas. It will take a charismatic leader to state the case for tax reform and to push a sensible reform. But it could work.

Bert, I certainly admire your enthusiasm and optimism.   ;-)

I wonder though... how are you planning to get the "obstructionist Republicans" out of the way, while still listening to all (or even most) Oregonians?

I think you're right about the frustrations over property taxes that were harnessed by the Measure 5 efforts. But do you honestly think that people who were frustrated over their property tax increases were simply upset that the money was being taken in the form of property taxes? Or, rather, were they frustrated at having to pay more taxes in the first place?

Do you really think that if, in place of Measure 5, you offered the people a simple, clear way for them to continue paying just as much in taxes as they were pre-M5, that this would address their concerns? I rather suspect not.

Of course, I suppose you could offer a simple, clear way to shift the tax burden onto somebody else, which is always popular... except to "somebody else".

Ah well. It's still an admirable goal, so let's see what we could do to make it happen.

I'd suggest first that the current crop of legislators isn't going to get it done. And electing a new crop of legislators who are up to the task is going to be pretty tough. While ultimately any changes would be so complicated that we wouldn't be able to implement them as citizen initiatives (single change rule and all), there's nothing that says we can't develop proposals privately and then lobby the legislature to implement them.

Following along those lines, perhaps we the people should start now to form a statewide, grassroots, omnipartisan organization to develop specific real workable solutions? What do you think?

I am not convinced Oregon has no spending problem. Oregon taxpayers need a better handle on the items we spend lots of money on and Oregon Chalkboard Project thinks so as well.

One way to help with the budget problem is to eliminate the initiative process, and require our elected officials to do their job. Part of our problem is that, in the same election, we'll cut our taxes and require the legislature to spend money on our pet projects. No legislature can cope with such conflicting directions.

David:

How will we get rid of the Republicans? I think the Democrats will retake the House in the not too distant future unless the Republicans move back to the middle, which is unlikely. I imagine we'll have a D majority in both houses and a D governor after 2006. Then, if the Democrats have a leader they can unite behind, they can propose some bold initiatives like tax reform.

You're absolutely correct about the root of the tax frustration. It's not the particular way the tax is collected (though I think that rankled some people who were essentially taxed out of their houses), it was the amount. But more than that, I think people got sick of complaining with no result. McIntire and Sizemore offered them a way to express their frustration that couldn't be ignored. Something similar happened recently with M37.

I do think shifting the tax burden is important. It seems to me that the middle class workers are paying more than their fair share. Perhaps I am in the minority. There's one way to find out -- talk to the people. I don't think taxes, as a whole, are too high in Oregon. I think they're too high for some and too low for others.

I agree that citizen initiatives would not work. There's the single change rule. They also have a nasty history of unintended consequences. I think it has to come from the legislature. These are the people we pay to do the hard work -- research, modeling, debating, deal-making, etc. -- that leads to good public policy. If we always go around or over them, why bother having them in the first place. But to earn our respect and trust on an issue as touchy as taxation, they have to include us.

I am intrigued by your idea of a omni-partisan, grass roots group to develop real workable tax reform. It appeals to the moderate in me. It appeals to the populist in me.

Like everyone, I'm pretty busy. I have a family, a job and volunteer stuff. Once May is over, I should have some more time. If you're interested, let's meet for a beer or coffee. Let's see how closely our ideas and ideals align. Then we can decide whether we have the time and energy to put something together.

If we don't do it, someone else should.

Since there is another "Sid" floating around here (what are the odds) it looks like I should start using my last name in order to avoid confusion.

Kari-

I like the idea. Since our legislators can't come up with any creative ideas, maybe we can? Could we get David C. Johnsten, Paul Krugman and Warren Buffet on the Blue Ribbon Committe?

Sue hits the nail squarely on the head. Oregon's experiment in "direct democracy"--the initiative, the referendum, and the recall-- has gone awry. From a progressive point of view, the statutory and constitutional initiatives that have passed in recent years have all been disastrous.

I don't believe, however, that reaching consensus on tax reform should be all that difficult. As defined by the City Club, a fair tax is a progressive tax, meaning that the richer you are, the more you should have to pay.

A slight raise in the tax rates for the wealthiest individuals in Oregon would theoretically be opposed by only a quite small percentage of the population. A raise in corporate taxes should again be opposed by the same elite--namely, the shareholders of those corporations.

I agree, as the article clearly states, that business taxes should also adhere to progressive principles. It shouldn't be too difficult to craft either legislation or an initiative that takes that into account.

Bert, sounds good -- get in touch when your schedule allows, I think it would be interesting to see how much common ground there really is...   ;-)

Gus:

The link you provided didn't seem to work. But I found the main web site for the Chalkboard Project. Was there some specific document there you wanted to direct our attention to?

Sue:

I sympathize with the frustration over the initiative process, and I'm generally for more representation, less democracy -- but I'm not sure that eliminating initiatives entirely is the answer. Perhaps tweaking around the edges (such as prohibiting initiative-based direct spending requirements?) might be better? Just a thought, I'm sure such a prohibition might have unintended consequences of its own.

Terry:

Who says that the City Club gets to decide what's "fair"? Fair, after all, is a subjective term -- and I'm sorry, but in my opinion there's nothing at all fair about a progressive income tax rate structure. It's practical, sure, because when you want to take somebody's money you take it from the people who actually have money... but that's an issue of convenience, not fairness.

A proportional tax rate structure, by the way, also results in "richer" (higher income, anyhow) people paying more. In fact, structured properly, a slightly regressive tax rate structure could result in richer people paying more.

Of course I understand that what you meant is that paying more in the absolute sense is not sufficient, you want higher-income people to pay relatively more of their income. But that's where the fairness thing completely breaks down for me.

People like to picture a progressive tax structure as sticking it to the wealthy (and it certainly does do that), and the only remotely rational claim I've heard to justify progressive tax rates for the wealthy is that they somehow benefit disproportionately from government services compared to the rest of us. But that ignores the reality that a wide range of middle-class citizens (with a wide range of income levels) benefit roughly equally from government services, yet pay different proportions of their income to support those services. In many cases, those who benefit the most pay the least.

Even if you limit the tax increase to the "wealthiest" Oregonians... who defines what counts as "wealthy"? The original post mentioned increasing taxes for individuals making over $100K. Successful? Yes. Wealthy? Not in my book. Not by a long shot.

So, claim that progressive taxes are practical, convenient, efficient -- even necessary -- if you must, but "fair" is quite a stretch.

I am with you on taxing the folks who have the wealth. They owe the public the revenue, as a cost to living in an environment where they are able to amass such wealth.

The fact that someone thinks they should not have to pay x amount of dollars in taxes, even though they have great wealth is nothing but bald faced greed and greed is built on insecurity, fear, and selfishness.

Folks who think they do not need to pay a higher percentage of their incomes to taxes than less wealthy folks pay, even though they have the wealth, and will not miss a dime of it, have another think coming.

Now show me how we get it into law, you have my vote. It only makes good sense for the good of the whole society. We have enough wealth to afford to give everyone health care, housing, food, and excellent educations.

Thank god for an actual intelligent and civil discussion of the Oregon tax code. As a second year elementary teacher who loves his job but is driven to near madness by the failure of the Legislature to fund education, it is delightful to find people with courage and intelligence talk about how to fix things. I suspect that the progressives of early 20th century Oregon would roll over in their graves to find what the initiative system has done to their beloved state. It was desperately needed then, but has now undermined any will of legislators to serve as actual representatives of the people.

I don't get your comment about regressive tax system. In my mind, our 5% and 9% brackets are progressive, although not agressively progressive like the federal tax brackets. We also have no exemptions for capital gains, so affluent people who have lots of capital gains can sometimes have state income taxes approaching their federal taxes.

Also, what has Bush's federal tax cuts got to do with state taxes. You only get to deduct a portion of you federal taxes, so affluent people likely as not don't see the benefit of lower federal taxes in their state taxes.

But the bottom line is talking about raising Oregon Income taxes or making the brackets more progressive is going down a rat hole. Oregonians will vote for a sales tax before they raise the income tax.

I'd rather live in the USA than any other country, but if I had to choose, I'd rather live in Sweden than Angola, even though the taxes are higher in Sweden.

David Schwabe: The "regressive" comment undoubtedly counts all forms of state tax, not just income tax. You are correct, Oregon's income tax alone is progressive (though the brackets are so narrow it's effectively more of a flat tax than anything else).

But when you throw in all of the various other taxes (property, gas, cigarette, etc.) which are not based on income, then the overall tax system could be considered regressive.

But then, the cost of living itself is "regressive" by that definition (the cost of a loaf of bread or a gallon of milk requires a bigger percentage of a poor person's income than a rich person's income after all) so I'm at a bit of a loss to understand why that's such an inherently bad thing.

Anyhow, it would appear that those who complain about regressiveness in the overall tax system would like to compensate for this by mucking with the income tax.

By the way, I think you're dead wrong about Oregonians supporting a sales tax before they support a raise in the income tax. I guarantee you could craft a change to the income tax rates / brackets that would have a much better chance of passage than any kind of sales tax you'd care to present.

Oh yeah, and you'll hear the same complaints about sales taxes being regressive, too...

This is so good I am going to send it to my state rep. with a link to this topic. First, we want to be heard. It’s hard to trust the solution if no one asks us what the problem is. Second, we want to know that the legislature is actively and openly trying to help Oregonians, not special interests. Tell us why each proposal is being considered. And third, we want to see that the legislature is doing hard, honest work to craft a solution. We respect hard work.

Second, remember that kids who were about 10 when Measure 5 passed are now in their mid 20s and and perhaps married, perhaps with kids of their own. Individuals think for themselves, and the college students of 2000 were in public school when Measure 5 went into effect. Could they have been the deciding factor in defeating McIntire's 2000 ballot measure?

Remember also that Measure 5 passed in the NW quadrant of Oregon. Look at which counties passed it--certainly not all Oregon counties.

It is good to have a serious discussion of taxes here since it doesn't seem to be getting very far in the Legislature.

As I recall, Sen. Westlund sponsored something to get the debate started--a sales tax? Don't forget that great remark he made during one of the interminable 200 special sessions. Something along the lines of Gov. Roberts being right about Meas. 5 in everything but the timing.

Robert, your comments are truly frightening. You have a very punitive view of taxation. Unfortunately, your attitude is not uncommon.

Progressive tax structures don't just apply to the wealthy who "will not miss a dime of it". This isn't just about sticking it to millionaires. People with very middle-class incomes, who haven't necessarily "amassed wealth" (in fact, many of them have minimal or even negative net worth), end up paying a bigger percentage of their relatively modest incomes than folks just a bit farther down on the income scale.

For example, at the federal level (far more progressive than Oregon's state tax), why is it exactly that a single person who makes say $32K "owes it to society" to cough up 25% of his last $3,000 of income, while the same person who makes only $29K doesn't? What's so magical about the $29K mark? What sort of huge systemic advantages for amassing wealth does that $32K earner enjoy over the $29K earner, that justifies nearly DOUBLING the percentage of taxes taken out of that extra $3K income, from 15% to 25%?

This debate always falters on the question of "rich". Personally I would be happy if "rich" were defined at $100,000 or some number like that. The senior Mr. Gates (Bill's father) has interesting comments on taxing the rich.

What I like is the approach of those like David Cay Johnston. What I don't like is Republican US Senators saying Social Security and Medicare/Medicaid will cost their kids too much money but neglecting to talk about the cost of Bush tax cuts.

Somewhere I heard that if only some of the Bush tax cuts were not made permanent, that would be enough money to solve Social Security solvency.

And as far as tax breaks and the middle class, let's have a debate about those. Yes, some of them are good, and do good things. But let's see the people behind the tax breaks for 2nd homes and pleasure boats defend them in public as more important than funding schools, prisons, care for the elderly and medically fragile, etc.

That is a debate this state needs to have, during the legislative session or during campaigns for candidates. NOT during the debate on some hairbrained ballot measure which takes up multiple pages of fine print in the Voters Pamphlet.

I've seen this whole line of discussion occur so many times it's discouraging. All this great talk, but we can't get anything done.

I unfortunately agree with those who have said they don't believe major tax reform is politically possible. That is why perhaps we ought to look more at how we can produce more taxpayers or get those we have to make more money so they will pay more taxes. I'm talking about looking at why Oregon is losing jobs, and even more important, why we're losing well-paying jobs. Is it over-regulation? Outsourcing? A fixable unfriendly tax situation? I think we'll have far more success tackling Oregon's revenue problem by looking at policies that will encourage job creation than by raising taxes.

Following on Becky's points, and presuming most of the conversants here are Portlanders, let's not forget the recent Forbes report that showed Portland No. 6 in high-taxed cities in the nation, and No. 5 for the lower income classes. And yesterday's Portland Tribune noted that downtown has lost 4+ thousand jobs in the last four years. Meanwhile, fancy developments continue apace.

And the agencies that most need funding -- schools and police -- are being bled dry internally by their pension and benefit plans, not starved externally from lack of public support.

Oregon's tax system has long been considered pitiful owing to its standing on two rather than three legs. Income taxes are high and virtually flat. Clearly the most stable proposal would be to trade a smaller sales tax for a portion of the income tax, with as firm as possible guarantees that they would not increase.

Fewer than half of Oregonians were born in the state. It would be interesting to see how support or opposition to a sales tax would divide on those lines. I personally would expect the most vigorous opposition to tax increases of any sort from the native-born who question both spending and political candor about it. And from the lower income classes who are usually overlooked in these great debates (but for being taxed more via cigarettes and lotteries).

David,

Progressive Taxation -- Ineffective Blunt Instrument

Does that point out the flaws of the analytical perspective of both the right and the left about progressive taxes?

<blcockquote>"If for each move to remedy inequality through progressive taxation we pass some measure to make the company town vision of capitalism more prevalent then there is a net loss in public benefit."

One of my points is that wealth protection is just a necessary, but only subsidiary, component of capitalist incentive to meet the needs of others.

Frankly, I can't think of a worse way to try to reform or change the tax structure than on "fairness." It's a loaded moral term. Read the comments here. People will not and do not agree on what's "fair."

Personally, I think "fair" should be gotten out of the equation and discussion almost altogether. Imagine fielding it instead on what is pragmatic. On what best will work.

For one example: what good does it do to tax the poor? Tax the poor, and tax everyone more to fund agencies to provide for them. To my knowledge, the Earned Income Credit on the national level has abated a lot of working-level poverty at a relatively low and straightforward cost.

The more unloaded the discussion can be with moral terms, the better I think it might fare.

My tax-free two cents.

Ron,

No, I didn't find your post particularly compelling.

I understand the point about a major function of government being protection of private wealth/property from the predation of others. And, thus, those who have more wealth/property derive more of that benefit from government than those who have less. It's questionable whether they derive disproportionately more, but I'll set that aside for a moment.

So that seems like a decent argument in favor of a proportional, not progressive, tax system. If you make 3 times what I make, you have 3 times the property to protect, thus presumably derive 3 times the property protection benefit that I derive, so you pay 3 times what I pay in taxes.

But under a progressive system, you might end up paying 4 or 5 or 10 times what I pay in taxes.

As for the rest of your piece... sorry, but I don't buy into the idea that government tax policy should be based on extracting as much wealth from individuals as possible short of removing incentives to meet other peoples' needs. And I don't quite buy your proposition that government also exists to prevent companies from getting "too big for their britches".

Second, remember that kids who were about 10 when Measure 5 passed are now in their mid 20s and and perhaps married, perhaps with kids of their own. Individuals think for themselves, and the college students of 2000 were in public school when Measure 5 went into effect. Could they have been the deciding factor in defeating McIntire's 2000 ballot measure?

Probably not. I was in college when M5 passed and fairly politically active. I voted against M5 because I was told that it would "hurt education". Having grown up in a school district that routinely rejected school levies (until the last possible moment when local taxpayers figured all the fat was removed). In 1990 I hadn't yet earned enough money to have to pay significant taxes, I certainly didn't own a home and I was on student financial aid. I went to rallies in opposition to the M5 cuts and chanted things like "education is a right" without ever recognizing the funding of this "right" was burdening others with significant payment responsibilities.

My perspective was insulated from reality. Fifteen years later, I can barely recognize that kid.

I'm sure that I'll be accused by someone here of wanting to have my cake and eat it too, but knowing what I know now, I'd be more likely to vote for stronger property tax limits than to remove the M5 cap.

Most of the people I stay in touch with from my college days have similar perspectives.

Could [college students] have been the deciding factor in defeating McIntire's 2000 ballot measure?

McInitire's spending limit in 2000 failed for other reasons:

1) it was pre-recession while we were still having record growth in government tax revenues every biennium, so the spending problems didn't seem real yet,

2) the limit included federal funds requiring us to refund them to the feds,

3) The opponents outspent proponents by more than 10 to 1,

4) Jack Roberts led a campaign to weaken Republican support (ultimately costing him the Rep. gubernatorial nomination), and

5) Nobody was aware of the PERS problem yet.

In politics it's impossible to separate pragmatism from moralism (or ethics). I'm a liberal and not a conservative on both grounds, and I don't apologize for using the term "fair" to describe a progressive tax code.

But facts are facts. If you believe in the value of goverment programs to serve the common good, as I do, then you must confront the "fact" of chronic underfunding of public programs. And acknowledge that

• state revenues HAVE dropped as a percentage of per capita income;

• the wealthiest Oregonians pay a smaller share of their incomes in overall taxes than the poorest;

• and, since the passage of Measure 5, we spend LESS money per student in funding public education, which has resulted in fewer programs and overcrowded classrooms.

Public education is something I believe in, both for pragmatic AND ethical (or moral) reasons.

If you like moralizing permeating the public policy discussions, enjoy the religious right. This isn't a fight I not only don't want to see to the end, but don't even want to see for much of a day.

In fact, I realize in reading your post, Terry (though this is not personal to you), that the infusion of the education discussions with this guilt and moralism are what makes me so hopelessly tired of it, especially.

David

"I understand the point about a major function of government being protection of private wealth/property from the predation of others."

That is quite a twist of a phrase. Not major . . secondary.

Risk, or the lack of hiding place from risk offered by government should provide all the predation that is necessary.

Your first mistake is to make too much of quantifying specific numeric person to person measures. Stick to the framework of incentives, which yield not one iota of clarification on specific quantification of 3 times or 5 times this or that, or even clarify whether a CEO getting 1000 times the income of a worker is either good or bad. You mix apples and oranges. The numbers that you posit (anecdotal numbers) are often the necessary result of arbitrary line drawing, by definition arbitrary. You can't work backwards from those lines to deduce a theory.

"but I don't buy into the idea that government tax policy should be based on extracting as much wealth from individuals as possible short of removing incentives to meet other peoples' needs."

Again . . . Risk, or the lack of hiding place from risk offered by government should provide all the predation that is necessary. The threshold that I presented for extraction is that point where inequality at the top end actually bites into economic activity, which is actually much higher than some minimum reward necessary to achieve an incentive. Perhaps you were merely playing devils advocate and I did not make my point clear enough. Retention of capital that is always available to lose through stupid business judgment is essential and could not exist under your rewording of my point such that it would all be taxed away before it could be lost in a hopeful but failed venture.

Government intervention more often than not actually heightens the worst elements of the known and bad tendencies of Capitalism rather than remedying them. [This is actually where the gamesmanship in Salem can continue apace regardless of a spending limit . . . the tweaking of capitalism can go on and on without being measured in either revenue or appropriations.]

Do you at least accept the premise that Capitalism is an ideology that is based on net public benefit?

If you can get over that hurdle then you can go pick up an old text on Comparative Economic Systems and get a peek at the variety of measures of how well the various example systems have met their intended theoretical, and laudable, goals.

The blanket objection to progressive taxation is about as blind as is a belief that there is no role for private ownership. Both are incomplete, but understandable in the context of polarization and the frequent resort to rhetoric for mass consumption.

Do you at least accept the premise that Capitalism is an ideology that is based on net public benefit?

I don't. Capitalism is justifiable as the natural economic system arising from recognition of individual rights, rather than simply a system that best achieves a utilitarian good.

There are circumstances when a system utilizing slavery (limited to a caste or drawn by lot) could theoretically provide a greater utilitarian good to a society (depending upon how one measures such things).

I would oppose slavery even if someone could convince me of a net benefit for society.

I support capitalism because doing so is in accordance with respecting the fundamental rights of individuals (life, liberty, property) rather than whether it consistently wins the "greatest net social utility contest".

It just so happens that it generally can win that contest.

None should ever doubt that Ayn Rand was every bit if not even more a supreme ideologue as were the Bolsheviks she operated in reaction to. This sort of libertarianism is a religion. It is its own justification.

This sort of libertarianism is a religion. It is its own justification.

Perhaps, but the religion label can be attached to any set of beliefs.

How about utilitarianism?

It is a conceptual method for quantifying the unquantifiable (public utility). Utility cannot be observed or measured, yet it serves as an unquestioned justification for political action by its adherents.

Smacks of a religion to me.

Sally, how do you justify exercising political force with respect to your neighbors?

"Sally, how do you justify exercising political force with respect to your neighbors?"

You're arguing anarchy now? Because if you are not arguing for anarchy, you are accepting some degree of "political force."

Ron, from the beginning of your article (emphasis mine):

Think in terms that the government at its core is for protection of persons and "property" from outside intervention.

Do you at least accept the premise that Capitalism is an ideology that is based on net public benefit?

No. Not at all.

Capitalism is an economic ideology that is based on private property and free markets. It is precisely because these fundamental elements of capitalism do not always provide the greatest "net public benefit" (depending on how this is measured) that people try to corrupt the capitalist ideal with artificial regulation (as opposed to the natural regulation of free markets).

Wikipedia actually has a pretty decent article on capitalism, including many debates over "social justice" questions related to capitalism. I'd recommend you give it a read, particularly the section on "Unequal Distribution of Wealth".

I think you're mixing the role of capitalism with the role of government when you aim for "net public benefit". Capitalism is but a tool, a principle of economic organization, which can be used to achieve the goals of a society. It happens to provide, I think, the best possible framework for overall economic progress and development. It does not provide, nor is it intended to provide, "social justice" or equality or a better life for every individual. For that reason, governments around the world temper pure capitalism with regulation of various forms. It is a trade-off of economic efficiency for other goals. And I don't necessarily think that's all bad, I'm not a raging hard-core libertarian pure capitalist.

But neither do I think that economic inequality is all bad. I have no problem with uneven distribution of wealth. I don't believe that the concentration of wealth is inherently bad, such that it requires some sort of "corrective" action -- which seems to be your argument.

Which brings us back to this argument about progressive taxation, one of the artificially imposed checks on pure capitalism. I can accept the pragmatic argument (as Sally suggests) that we take more from the rich because they have more to take. I don't like it, but it makes some sense. I reject the moralistic argument that many espouse, that we take more from the rich because it's the "right" thing to do.

For that reason, I believe the tax system should be no more progressive than is absolutely necessary to achieve our tax revenue goals without adding to our state spending requirements (i.e., we shouldn't tax the poor so much that they require more state support services as a result, as that is counterproductive). If a proportional tax would get the job done, that would be ideal. If it wouldn't provide enough revenue, then the system should be made slightly more and more progressive until we do achieve the revenue goal. And then we stop making it more progressive.

Sally,

I simply asked if you have a personal justification for exercising political force against your neighbors.

I do - to the degree it is necessary to preserve a society that respects individual rights.

I never said anything about anarchy.

My libertarian ideology (as you term it) is tempered by the pragmatic recognition that social respect for individual rights does not just spring from the ether. At some point (in the way off science fictionish future) maybe a society will evolve to the point where strong respect of individual rights exists without government. But I'm not holding my breath.

Sorry, Pancho, I apparently presumed an underlying dispute of social order via government. But "social respect for individual rights" comes via enlightened liberal ideology in the classic sense, yes?

As to libertarians, I admit to no fondness for Ayn Rand. Elsewise, I think you would find I have substantial libertarian tendencies in my politics of what I think of as a pragmatic center.

And in that the planet or country is shared by all those who fall upon it, I would agree with Mr. Ledbury in "the premise that Capitalism is an ideology that is based on net public benefit."

Sally,

Rand was an ardent individualist and developed a theory of individual morality based upon rational self interest.

So long as her theory is limited to the sphere of personal ethics, I have few qualms with it.

However, strict application of her theory in the political realm is counter-productive in any society that doesn't hold a deep reverence for individual rights and a developed appreciation of the virtue of benevolence.

Ayn Rand's philosophy is Objectivism as described in a Wickipedia article.

Many of her philosophical ideas are in line with libertarian views. I found it interesting that she had the Taggart children in Atlas Shrugged attending public school. I am sure she would be critical of social (unmerited) promotion as practiced in today's public schools.

David,

Slavery would of course conflict with rights for individuals and a government system based on protecting individual rights. The focus on the individual would not be needed unless there was some other larger power to which its' application was intended, a power that may be either private or public. The protection of an otherwise powerless individual against a greater power hardly applies with equal vigor to the party with greater power.

I once had a short discussion with someone who thought the monopoly was good. The reasoning skills of that person seemed not yet refined enough to even justify further discussion.

At which point does capitalism (in your view) conflict with the liberty interests of another individual? (Yes, this is an open ended question . . . posed so as to glean from you any hint of a limit on capitalism in the liberty interests of a fellow citizen, anywhere slightly above a slave would seem to be progress in recognition of liberty.)

I am less concerned about maximizing net social benefit (for reasons of political reality and practicality, if for no other reason) as I am in limiting things that knowingly and unequivocally hurt society. You can flip proposition quite well, but with each flip you demonstrate only that you heard the proposition presented, which is a start, but it necessarily alters the precision of the proposition in the first place and its application.

So you oppose slavery, but does that yield any clues about any theory or vision that might allow a stronger protection of individual liberty other than to ban slavery. (Hint, liberty is the concept to which I point.) I hold liberty, all by its' lonesome, to be thing of value. There is surely not a one to one correlation between a bank account value (relative to others) and liberty, otherwise the liberty argument alone would used as a justification for denying liberty to another. That would pose an absurd circularity that leads nowhere.

David,

What is property anyway?

Go read Stephen Roach's characterization of Alan Greenspan's conversion of property values into "pixie dust."

Can you tell Alan to quit stimulating consumption and forcing people into stock speculation and housing speculation because he made bond returns so damned low, intentionally? So as to bubble up asset valuations and to stimulate consumption . . .

It is a grand illusion. We are more vulnerable to outside intervention today than in quite a great while. This affects everybody's liberty interest, rich and poor, because of economic inefficiency that is borne of many causes.

I suppose one might make the case that Alan does not have our collective best interest at heart.

I would certainly not support any argument that government has no role. Even a libertarian recognizes the need for the existence of courts to assure that there is a place to enforce private contracts. Heck, a court might look to a document and call it an adhesion contract and thus give it a bit of a more thorough look, based on the differential in bargaining parties. (This squarely recognizes inequality as a factor, in a concrete setting rather than theoretical.)

Whom will we blame when the ASEAN countries get their collective cards lined up to make the US dollar worthless? Well, worthless at least in our relative ability to obtain oil resources in competition with the demands of others by simply printing more money?

Imagine if Alan inverted his tactical method so as to stimulate wages to hyper-inflate, intentionally, to stimulate consumption, while looking at asset-inflation as the devil to be contained. Would such broad variations in discretionary economic choices make any squabble over minor arbitrary adjustments in setting progressive taxation rates look almost idiotic by comparison? If Oregon set out to do nothing more than to counter balance Alan's asset-only hyperinflation we would have to force people to claim their increased properties as a value today, without delay until sold, and transfer most if not all the appreciation to the government for direct transfer payments to the citizens with the express purpose of redistribution, but it would only be to remedy Alan's errant ways that favored capital over labor. It would be to maintain balance.

If asset values double in the next two years would you jump for joy at our new found wealth? Or, would scream out in anguish, because you recognized it for what it was, an orchestrated devaluation of the US Dollar in much the same way as applied by the IMF against a country like Argentina?

Where would relative wealth of various folks be today if Alan and Congress kept the money supply pegged only to the minimum necessary for the free exchange of goods, in a passive role rather than an activist role? The values that people assign to property are based on the perpetuation of policies of the government, they are not based based on the result of free market exchange of goods in an economic model where liberty overshadows all other factors to the point on making them de minimus influences. Alan has this one step further and converted asset valuations to his own personal money supply . . yes, your money is already his money to adjust on a whim.

This is what we do to other countries, by design, so as to control them through control of their currency. Payback time is coming . . .

Ron,

These are interesting questions/points that you've raised -- but you've completely changed the subject from the appropriateness of progressive taxation (at least marginally related to the original article) to questions of liberty in a Capitalist system, the monetary policy of the Fed, and a theory about hyperinflating wages over assets.

So rather than jack this thread, why don't you submit a guest article here to talk about your ideas, and we can go through them then. Or, post on your own blog (I notice there's not a lot of comment traffic there, though) and we can discuss them there.

David, are you acknowledging that it is patently absurd, in practice and in theory, to assert that progressive taxation is wholly incompatible with liberty and capitalism?

Your critiques of the left in opposition to progressive taxation, arguably based on liberty or capitalism, started giving the real value of capitalism a bad name and distorted liberty.

My target audience here is the lefty, theoretically, that dismisses capitalism and private property, in total due to misunderstandings. Your points fed that misunderstanding with a bit more wood for the fire, but that wood came from misunderstanding as well.

If the size of the audience is the sole criterion then we might just pack our bags because that implies that reasoning is pointless to persuade anyone about much of anything. If the O has a circulation of 200,000-plus then, by definition, they must be right, or at least on point? Huh?

In any event, the practice of building targeted tax breaks into the tax code under the theory of disturbing the market, for the benefit of the General Welfare, should be looked at before the regressive taxation of the poor folks who have to buy goods and services, and homes I might add, from all those marketeers and beneficiaries of special treatment of capital gains, who all claim to be good capitalists.

The simple progressive taxation that I want to see is the raising of the standard deduction; but it is not really based on notions of progressivity anyway, rather it is a band aid to remedy the cut in the buying power of wage laborers caused by the negative consequences of selective legislative support for particular businesses.

I could make an equal protection argument that it should be no lower than 135,000 to coincide with IRC sec. 416, for Key Employees. The need for someone to eat and live today, so as to exist tomorrow, is surely no less important than allowing someone with 135,000 in excess disposable income to shuffle that excess off into a special account beyond the reach of the IRS and beyond the reach of private persons with whom that individual may enter into commercial transactions. The profoundly regressive nature of much of the arbitrary line drawing for such special bank accounts, based on progressively greater protection for the relatively well off, is nearly laughable in its' simultaneous absence of any regard for either capitalism or fairness. My capitalism based and narrow counter argument (to the retirement code disturbances) has thus far been confined to complaining that it is a tax-code based reward to delegate investment decisions to remote managers that are beyond the effective reach of the depositor to personally supervise their investment and savings. (It is designed to point out hypocrisy.)

If we simply raised the standard deduction to the federal poverty level, or 25,000 or even 75,000, would that not encompass (or overlap) with all the discussion of the minor adjustments over tax rates applicable to all those folks above the current standard deduction and the new higher standard deduction? This type of practical tax code modification would be more consistent with fixing the regressive nature of government intrusion into the capitalist marketplace, but does not answer the Lefty complaint about "replacement revenue" to serve this very same group. (It too is designed to point out hypocrisy, and here posited to demonstrate that raising revenue is actually more of a dominant concern than is being progressive.)

The interests of one third of the population get left in the dust by the agreements between the hypocrites on the left and the right.

My link to my site in an earlier comment was an invitation to you to take the debate over to my own site, and specifically off of this site, so as to allow us to venture off into any tangential territory to which we might drift. You did not accept this invitation, which is solely within your control, not mine. If I do not have enough traffic to attract your comments then I suppose that is my fault, I could always try adopting a policy favoring the exaggeration of polarization so as to get more traffic.

I voted for property tax limitation in the form of measure 5. Not because I thought it was the best plan, but because it was the only plan to stop wildly escalating property taxes from forcing me out of my home of over 40 years. Politicians in Salem promised time and again that they would address the problem of property taxes rising so much faster than wages. It became evident, however, that they would never accomplish any kind of a reform. If we were to repeal measure 5, these same problems would come crashing back. I would prefer a sales tax that exempts such things as basic foodstuffs, utility and insurance payments, medical bills and other basic things that you need to live. That way, the person who can afford that new SUV and other luxury items can pay slightly more for them and help the revenue problem.