Multnomah I-Tax Compliance: 98%
Remember that three-year Multnomah County temporary income tax you paid through 2006? Well, about 2 percent, or $7.5 million, remains unpaid, according to county spokesman Shawn Cunningham. In February 2005, the county filed its first lawsuits against income-tax delinquents, and Cunningham says the county is optimistic that scheduled payments will help to collect most of the cash.
One bit of missing context. Much worse is the rate-of-compliance with federal taxes. 14% of federal taxes go unpaid and uncollected -- and that number has held steady for decades. From the AP:
An IRS study last year concluded that the tax gap in 2001 was $345 billion. Of that, $197 billion came from underreporting on individual income tax returns and $88 billion from underreporting by corporations and the self-employed. The rest came from those not filing or not paying the proper amount.That gap narrowed to $290 billion after enforcement efforts and late payments were factored in. Still, that left the government collecting only 86 percent of the more than $2 trillion it was owed in 2001. ...
The U.S. rate has held steady in the mid-80 percent level the past three decades.
Federal income taxes are largely withheld from employee paychecks. Many critics argued that the lack of widespread withholding for the Multnomah I-Tax would cause massive underpayment.
That didn't happen. Why not? Discuss.
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March 09, 2007
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11:18 a.m.
Mar 9, '07
The county is wrong about the compliance rate? 98% is not a credible number.
Mar 9, '07
I also have to question the IRS' stats. I'm no financial whiz and don't live in Mult Co so don't know how the I-tax worked, but...
But how does one under-report on individual income taxes when they are withheld? Wouldn't that make you then - at least partially - self-employed?
And if people can do this at the federal level, who's to say those same folks living in Mult. Co. aren't just paying the I-tax on the portion of income they report to the feds?
Mar 9, '07
The I-tax was low enough that people felt like it was a better use of time to just pay it rather than try to avoid it and potentially risk the consequences.
Also, people knew their money was staying here locally in the community, and not going off to D.C. to fund who knows what pork barrel project.
It's a well known phenomenon that if a tax is relatively low and uncomplicated, compliance will be higher.
Whereas a relatively high tax that is complex and a pain in the butt to comply with will incentivise people to try to get around it.
So it is a type of law of diminishing returns. At some point if you raise a tax too high, and make it too complicated with too many special deductions, tax credits, loopholes, forms to fill out, etc, then evasion will go up and compliance will go down, resulting in less money collected as rates and the degree of complexity go up.
Compared to the federal tax system and even the state tax system, the I-tax was low, simple and straightforward, and stayed in the local community.
Mar 9, '07
My state refund went right into the county coffers, even though I have no kids in the school system in Portland. I guess the commissioners need some way to get their salaries.
Mar 9, '07
Don't these greedy jerks get enough of our money already? Maybe they have more wasteful "pork projects" of their own... Are more trams in their plans? How about more public art along that MAX that just gets vandalized? More MAX trains, anyone? They won't be satisfied until they're taking 80% of our income like they do in some European countries. After all, aren't they trying to emulate European cities? What better way to do it than make the already bloated and wateful government even bigger? They cannot even properly manage the money they already get, why do they need even more? I am fed up.
1:46 p.m.
Mar 9, '07
So you would rather kids in Multnomah County not be educated?
Your paycheck is directly or indirectly tied to having kids educated, no matter what your education, unless that is you work for a corrections institution that is.
1:48 p.m.
Mar 9, '07
THE END IS NIGH!!!
(scroll)
Mar 9, '07
z man:
Compared to the federal tax system and even the state tax system, the I-tax was low, simple and straightforward, and stayed in the local community.
Bob T:
When it comes to paying taxes, that's when progressives admire a compliant citizenry that doesn't question authority.
As for the money staying here, well, all ya gotta do is send it to Washington, DC and have it sent back with strings attached like with everything else.
Bob Tiernan
Mar 9, '07
I am a big supporter of education. However, the I-tax was not well thought out. I would agree with those that are single, unmarried and do not have kids like myself, except that in many ways we ALL benefit in some way or another from taxes or government services. So, who am I do deny someone's kid a good education? "It takes a village..."
However, having to pay this all at once for a lower income person like myself is a burden to carry. I would more strongly be in favor of a .5 or 1% sales tax over an income tax that is not withdrawn from one's paycheck automatically. However, getting this passed in an economically conservative state such as Oregon is an unlikely possibility.
Mar 9, '07
"As for the money staying here, well, all ya gotta do is send it to Washington, DC and have it sent back with strings attached like with everything else.
Bob Tiernan"
No one has mastered misusing tax dollars more than Neo-Conservatives. No one has outspent, mismanaged, broken more laws and manipulated the system more in the history of the US than the current administration and the new wave of Republican malcontents that are currently in office.
If you want to prove that government is ineffective and corrupt, elect a Conservative! Their get in there and prove it!
Mar 9, '07
"They cannot even properly manage the money they already get, why do they need even more? I am fed up."
You can always move. I am sure that there is a glorious example of conservative free market capitalism someplace in the world. Oh... there isn't? Not one single example? We were trying that in Iraq? Slavery is over? Well, I am sure there is some island out there where the free traders/ anti-taxers can reside in peace with their guns and undercover gay sympathies.
3:00 p.m.
Mar 9, '07
First, it's not about getting "more," it's about getting what was owed for past years. The I-Tax is over, unless of course you never paid it.
Secondly, most employers do not take enough out of your paycheck. Even when we have extra taken out of our paychecks, we would regularly have to pay more at the end of the year.
When I worked for Congressman Lampson, the department that handles checks for Congressional staffers failed to take any taxes out of my check whatsoever. When I pointed it out, I was told that was correct -- I wasn't supposed to have any withheld. Being 19 and having my first "real" job that lasted more than a few months, I believed them. Until I got hit with a nearly $2K tax bill, plus penalties and interest.
There's also all those contract workers, self employed, etc. Their income gets reported to the IRS (for amounts over $600), but nothing is taken out of their checks. They therefore owe income tax, Medicare tax, and both portions of the SS tax. And believe me, that hurts. We're still paying off nearly $10K in taxes for 2001 and 2002, and one of those years we had a child to claim (all for a position that only paid $10/hour).
There's plenty of reasons why the IRS payments are so low. It takes years for the IRS to come after you (based on my experience, about 6-7), while Multnomah County is hitting people a lot faster.
People also felt a lot more connected to the money locally -- it went into important local services like schools.
Mar 9, '07
I don't think I have ever agreed with Jack Bog before, but I think he's right on this. 98% compliance is not credible. It would be enlightening to see how this was calculated.
It seems that the amount I owed was based on my Federal return. So maybe what's going on here is that the County received 98% of the revenue that was anticipated from the 86% of federal returns that were complaint. That makes the County's compliance rate closer to 85%, no??
I'm not debating the merits of the tax; we all benefit from an educated populace. I just think the arithmetic may be questionable.
3:15 p.m.
Mar 9, '07
The IRS receives information on the amounts your earn. They get a copy from your employer, and if you're a contact worker they get info when you make over $600. So the IRS has a pretty good idea of what you made and what you should pay, minus anything that's "under the counter."
The state also gets some of this information, although employers are not necessarily as good about providing it.
If the county is getting their info from the IRS, they're not getting info based on the 86% number. It would be based on what the IRS believes you made and should pay (of which the IRS has collected 86%).
Also, one thing to note-- the IRS is also often times wrong about what is owed. When they calculate it, they remove all extras (kids, filing jointly, the fact you're married and maybe your spouse isn't working, etc.).
So when I forgot to file one year, I get a tax bill for thousands more than I owed -- all because they calculated me at single with no dependents. Even though they knew this to not be the case. It's standard practice according to the people at the IRS I've spoken with.
Mar 9, '07
Jenni,
Your employer withholds taxes based on your W4. FICA and Medicare are flat rates, 6.2% and 1.45% respectively. The amounts withheld for Federal and State income tax are computed based on your filing status, number of exemptions and any extra amounts you request on your W4.
Basically, you are in control of your withholdings, not your employer.
As far as "contract" employees are concerned, it is illegal for an employer to call you a contractor unless:
You provide the same service for more than one client. You provide your own workspace and tools.
An employer can be held liable for taxes not withheld if they deemed you to be contract labor when in fact you did not meet the criteria.
Mar 9, '07
I wouldn't be surprised if there is high compliance on the personal income tax. Basic information for federal, state, and local taxes is the same and information is shared.
What would be more interesting is compliance on the business income tax. [Hint: they can't possibly have a clue. Expenses can easily be moved into Multnomah County, reducing taxes there. The corporations reduce expenses in jurisdictions where there are no income taxes, magically increasing profits.]
Too bad individuals can't play by the same rules!
Mar 9, '07
Who cares about educating the children? Many of them are illegitimate anyway. I don't know why single people should be punished for the choices of breeders. If anything the single people should get a tax refund since we aren't contributing to the social services the little brats will use throughout their childhoods.
4:57 p.m.
Mar 9, '07
GT, go away. You've stopped being interesting.
Mar 9, '07
Make me.
Mar 9, '07
My state refund went right into the county coffers, even though I have no kids in the school system in Portland. I guess the commissioners need some way to get their salaries.
My taxes help pay for the pavement and sidewalk on your street, even though I don't live there.
Mar 9, '07
Who cares about educating the children? Many of them are illegitimate anyway. I don't know why single people should be punished for the choices of breeders. If anything the single people should get a tax refund since we aren't contributing to the social services the little brats will use throughout their childhoods.
Maybe this guy has the last of the "Non-Breeder" bumper stickers on his automobile. Those have been replaced, however. Last weekend while walking with my 10-year-old in the "progressive" Hawthorne district of SE Portland, I saw a vehicle with these two bumper stickers:
"Fewer People--More Wilderness", superimposed on a diapered baby with a line drawn through it.
and another with wording close to this:
"Stop Corporate Waste--Dumpster Dive"
Here's a suggestion to GT, hop in that dumpster and wallow for awhile.
Mar 9, '07
You know what? Your taxes do NOT pay for the sidewalks. Private property owners have to pay for the sidewalks themselves. Try again!!
Mar 9, '07
GT--My taxes for for the stop signs in your neighborhood, even though you don't use them.
5:08 a.m.
Mar 10, '07
Actually, my husband and I have made the same amount per hour at the same time with the same W4 filing, and we had different amounts taken out of our checks.
The fact is that employers are not very good at taking amounts out. When you're doing zero work outside the house, take fewer exemptions on your W4 than allowed, and even have extra taken out, there is no excuse for having to still pay out at the end of the year. But this happens to a lot of people.
And yes, there are a lot of contract workers out there. I've worked as one on multiple occasions. And they do fit the description you listed. It's not that hard to meet those requirements with so many services being moved out of the office and out to companies that contract workers (medical transcription and billing, for instance). These are people who work out of their homes.
Mar 10, '07
"The fact is that employers are not very good at taking amounts out. "
Very simple - On your W4 claim single and 0 deductions.
I don't get what you are trying to say. God know s govt would love to hit us with every tax they can especially once all smokers die off and the poor go broke playing the lottery.
Mar 10, '07
"Multnomah I-Tax Compliance: 98%"
I believe that. Heck isnt that the margin Castro and Central Asian dictators win elections by? Most people didn't even know how to send in this voluntary tax. Another Diane Linn clinker.
9:32 a.m.
Mar 10, '07
98% compliance is not credible.
I agree it's not credible.
One of the provisions of the ITAX is to make assumptions about what we THINK someone made as income --when they don't file-- and send them a tax bill based on this conjecture. There is much audit work to be done, and I suspect the County is putting a happy face on a much more problematic tax collection process then they care to cop to.
Mar 10, '07
It's very simple - just create your own company and then get paid as a 1099 contractor instead of letting the government help themselves to your paycheck. I am writing off my car, my rent because that is also my place of business, my cable (since I need to check the "business" headlines), my cable, my cell phone, my landline and my home phone. I'm even writing off my own company-paid health insurance since we all know what a lousy job this idiot money grubbing government does for people who need health care. I just love how they claimed a major victory and said the "Mental Health Parity" law was universal. Well they lied, yet again. Big shocker there.
Mar 12, '07
Bob T:
[with sarcasm intended]
As for the money staying here, well, all ya gotta do is send it to Washington, DC and have it sent back with strings attached like with everything else.
anonymous:
No one has mastered misusing tax dollars more than Neo-Conservatives.
Bob Tiernan:
Nope, sorry. I'm not going to get into a never-ending (as intended) argument about which shitty, corrupt major party is a little better than the other. if you want to go there then blow it out your ass,
Bob Tiernan
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