A proposed ballot measure to impose a progressive tax on our region's highest earners would help level the playing field
If the Legislature is in session, then people are complaining about taxes. You can’t have one without the other.
Taxes and who pays them were front and center in the debate over a bill in the House to raise the limit on the amount the Metro service district can levy. That decision could have an impact on the financial potential for a ballot measure this spring.
In May, voters in the tri-county area are expected to vote on a regional, 10-year homeless services measure, with the money coming from a tax on individuals earning $125,000 or more and households earning $250,000 or more. Metro is expected to vote on sending this measure to the ballot in the coming week.
Testimony in Salem on this issue has included universal acknowledgment of the problem at hand. Our homelessness crisis is not a finite construct, with a beginning and end. It is the result of systemic economic and social conditions, and we are losing ground to this complicated machinery. That’s why we need a declared state of emergency, a surge in resources, and a concerted effort to address addiction, mental health and employment needs. It’s why we need a regional infusion, and an income tax is the right way to do it.
DIRECTOR'S DESK: Yes to declaring a statewide emergency on homelessness
However, there is pushback against the income tax, from the Portland Business Alliance, Oregon Business and Industry, and the Hillsboro and Beaverton chambers of commerce. A form letter from business communities has called for a no vote on the measure, now before the House Committee on Revenue.
So is this unfair? Are we asking too much?
The Institute on Taxation and Economic Policy regularly conducts a distributional analysis of the tax systems in every state. Its sixth edition of the report, titled “Who Pays?” came out in 2018.
The analysis evaluates consumption taxes, including general sales taxes and specialized excise taxes; property taxes, including taxes on homes, businesses, motor vehicles and estates; and income taxes paid by individuals and businesses. Federal taxes are not included.
By its assessment, most state and local tax structures are regressive, with low- and moderate-income families paying more than the wealthy. The poorest are paying the highest effective tax rates. Oregon is no exception.
According to the Institute’s index, Oregon has the 41st most unfair state and local tax system in the country. The lowest 20% of Oregonians based on income pay just over 10% of their family income in state and local taxes. The top 20% pay 8.8%. That includes the top 1%, who pay even less.
That pattern plays out explicitly in sales and excise taxes, and property taxes. The poorest 20% pay 5.8% of their income to property taxes. The top 20% pay less than half that — between 2.8% and 1.7% for the very wealthiest Oregonians.
But there is one measure that goes out the opposite direction, one that shows a progressive rather than a regressive tax outcome. That’s the personal income tax. To be fair, Oregon is among the highest states in the nation when it comes to income tax, but the welfare of the state reflects the wider fact: The poorest 20% of Oregonians, those making $21,600 or less, are paying a higher share of their household income in state and local taxes than the people making more than $483,000. For reference, the $125,000 floor for the proposed measure’s taxation is in the top 20% income bracket.
The wealth divide, ever widening, is even greater in Oregon after taxes.
A family of three making $21,600 is right at the federal poverty line. This same family is making less than 30% of the Portland metro area median income. Under federal guidelines, the affordable-housing burden for this family is about $600.
Apartments like those don’t exist here. They haven’t for years.
It is more likely that they are paying 50% or more of their income on housing, squeezing resources from education, food and other necessities. Years of this have taken a heavy toll.
This is not sustainable, and the proof is laid out on our city sidewalks, in the tens of thousands of people who experience homelessness each year in our tri-county area. In addition to helping people who are already homeless, the May ballot measure would help stabilize families who are at risk of homelessness with rent assistance — one of the best ways to save money and lives.
DIRECTOR'S DESK: Our homeless neighbors need more than affordable housing; they need support
We are in a state of emergency, whether lawmakers declare it or not, and we have to respond with bold measures. We are all paying for this failure already, and the poorest, the most vulnerable, the men, women and children on the edge of homelessness, are paying the most.
With what we know about the state of homelessness and poverty in our region, we would be fools to trade real answers in order to protect the wealthiest earners in our region.
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