Oregon has been long overdue for a tax overhaul. Hooray for progressive change!

I hope it's not another screwing of the middle class as it is now. Sales tax is such a criminal way to soak the lower and middle class, seldom do the wealthy pay sales tax...they buy big ticket merchandise wholesale, hence no sales tax. Let us go back to corporate paying 50% of the burden.

It is great -- but it is hypothetical.

Tax reform in Oregon is absolutely necessary. I wish the governor and all of us the best of luck in that effort... because we will need lots and lots of luck!

I spent a fair amount of time going over the local tax measures on our ballot with some of my friends this election season and could not find a simple explanation of how our tax system works and why it sucks, especially here in Multnomah County. Does anyone know of good sources for learning about our current tax system? How about sources for how effectively the government spends its money, particularly in Portland and Multnomah County? One of my friends is convinced that the government cuts education spending so that voters will approve more spending and that the increased revenue is spent dubiously... I could not find proof that what she was saying was not true...(By the way, she is a good progressive.)

Hard to reform our tax code when even fairly civically-minded folks such as myself don't even know where to find the facts in layman's terms.

Christy,

One good overview to start with might be City Club's 2002 report, Tax Reform in Oregon.

I'll back the governor on this one.

But I still don't like the idea of a sales tax, and I never will.

I'd much rather see a wholesale goods transfer tax -- that is, a tax on wholesale items that is levied somewhere along the wholesale supply chain, either at point of delivery or somewhere else.

The point would be that items that get delivered via trucks or rail would be taxed, partially to pay for the impact of the fact of their delivery on the transportation system, and, perhaps, partially to help hold up the general fund.

Consumers wouldn't see a point-of-sale tax, however. The price of goods would go up, where the market could bear the increase, but it would be up to businesses to pay the tax. Also, items not subject to wholesale delivery would not be subject to the tax (i.e. wines sold at a winery, beer sold at a brewery, chocolate sold at the chocolate factory, etc.).

It would also make sense to raise the gas tax a bit, and index it to inflation. I know that Oregon has been studying the idea of switching from a gas tax to a mileage-based tax; however, I think that the good ole' gas tax is a better way to go for now, simply because it is the most efficient way to tax the consumption of fossil fuels. If people want to buy hybrids or ride their bicycles to escape this tax, great -- the state should be encouraging this behavior anyways. As a part of tax reform, the wholesale delivery tax mentioned above could help to offset any future lost revenue from general societal shifts away from petroleum usage.

I've expanded on these thoughts here:

http://undergroundscience.blogspot.com/2006/11/tax-reform-ideas-for-oregon.html

Let's kick-start the brainstorming sessions now!!!

Garlynn:

I do agree about brainstorming, and think we should have a lot more open public discussion of the tax system DURING the legislative session and not just do the init. at the end. Educate the public about how the system ACTUALLY works rather than just the spin we've been hearing all these years!

I happen to like SB 382 from 2005--sounds more balanced and well thought out than anything I have heard in a long time.

On your specific proposal about point of sale:

Isn't your proposal like "the equal tax" of a previous decade?

I recall when that was on the ballot and a friend who worked in big box retail asked what I thought of it. My response was this: "Suppose your store sells frozen french fries. The potatoes are grown and then sold to the company that cuts, freezes,and packages them. That company sells them to a distributor and the distributor sells to your company which ships them to your store. Someone in Receiving does the paperwork when the frozen potatoes are delivered to the store. " I think the equal tax was something like 2%, so I said something like "the farmer pays 2% when he sells to the food freezing company, the food freezing company pays 2% when selling to the distributor. The distributor pays 2% when they sell to the company. Does the company then pay 2% when they deliver the frozen french fries to the individual store? My point is this: which of your friends at work will end up doing the paperwork when those frozen french fries arrive, and is that really the best tax system?".

My friend said she'd never thought of it that way, and after much thought I think she voted against it.

My point is this: ideas that sound good in theory sometimes fall apart upon implementation, and that is why it is important to have lots of open public debate during a session rather than gambling it all on the wording of a measure which may have unintended consequences.

I would try to avoid, at all costs, the term "and let the public buy into it" when talking about grassroots, from the bottom up political causes.

I'd be careful of the wording on issues and how they are presented to the public.

The majority of Oregonians will see this as another "Conversation with Oregon" which was no more than an attempt to sell a sales tax to voters. A sales tax has failed 9 times and will again. We need to spend our time on tax reform that has a chance to pass such as corporate tax reform.

Why send an initiative to the voters? It is not the public's job to reform the tax code - it is the people we have just elected into office's job to do so. That is why we voted them in - to do thier job and not send it to the public just becuase they would rather have a nice lunch at a nice restaraunt than debate tax code. I am tired of having to decide items that is the legislature's job to decide. Do your jobs and don't pass it on becuase of tee-times at a golf course.

A sales tax is automatically considered "regressive," but as per usual there is no note here that Oregon's income tax, which kicks in to maximum 9 percent level at a pitiful $6,250 annual income, is regressive: to virtually all intents and ends a flat tax. The only tax proposal the Governor has clearly made is yet one more cigarette tax, a tax which also rests heavily on an economic and social underclass, hardly a "noble" or in my mind "progressive" way to pay for medical services for all the state's children.

Good for you, Eric! Why send an initiative to the voters? It is not the public's job to reform the tax code - it is the people we have just elected into office's job to do so. That is why we voted them in

Serious tax reform should come from many public hearings with lots of input, not from a "take it or leave it" measure whose wording may have flaws.

There will be those who say "we tried balancing the budget using a surcharge on income tax and it was defeated by the voters" but that is only half the story.

Would Measure 30 even have gotten on the ballot without the help from Dick Armey and his national group? Reporting at the time said otherwise. Last session the motto was "the voters have spoken on Measure 30" implying no discussion of tax restructuring allowed.

Well, 2006 voters turned down Meas. 41 and 48 along with most other measures. So don't tell me the anti-taxers control the political climate!

We pay legislators a salary to solve problems. They should earn their pay.

Yes, Fred, not only has M5/50 distorted our assessment system it has also shifted tax burden from high value sites to low value sites as found in a '99 study of property taxes in Salem. If we used a spending cap based on personal income growth, as Washington legislation proposed, we can efficiently recover a greater portion of the unearned value in sites (economic rent), which our 50-50 property tax under M5/50 restricts. As Harrisburg and 19 other Pennsylvania towns have done for decades (www.urbantools.net ), we can slash the tax on buildings and compensate on sites. It collects the publicly created value, as when zoning, annexation, or growth boundary expansions cause windfall gains in site values.

This split-rate property tax, according to Milton Friedman, is the "least worst." Why? There's no deadweight loss to the economy (drag due to disincentive effects inherent in sales, value added, income, payroll, etc. taxes), it's stable, efficient (virtually no fraud and low collection/enforcement costs), and, perhaps to his chagrin, very progressive.

Last session, SJR 1, a Sen. Revenue Comm. bill, received one hearing and bipartisan support. It proposed a Constitutional amendment to enable cities to tax improvements less and sites more. When phased in over five years, it effectively expands the tax base while causing infill and redevelopment. The conventional property tax screams SPRAWL, since it allows underutilized/vacant sites to be held so cheaply (look at downtown Portland!). But we should also look at other resource-based taxes: depletion allowances on water, air emissions, maybe timber, etc. Check out Alan Durning's book Tax Shift for a concise look at these. Let's start planning a sustainable economy while we evaluate taxation options.

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Kris Nelson Principal, Geonomics Consulting