Time for a Sales Tax?
Jeff Alworth
Over at the Oregon Economics Blog, Patrick picks up on an editorial by West Linn Republican Rep Scott Bruun and argues that it's time for Oregon to adopt a sales tax. Aside from the pervasive cultural distaste for sales taxes (which more than one well-meaning politician has overlooked), the arguments against it are that it 1) will damage Oregon's economy, and 2) is regressive. But Patrick argues that neither has to be true. First, sales taxes don't have to be regressive.
Sales taxes are sometimes characterized as regressive, but with exemptions of common necessities like food, clothing and medicine sales taxes can be made neutral or even made progressive with means-tested tax rebates. It is simply not at all hard to make sales taxes progressive. More importantly, the incentives with sales taxes are toward greater savings and investment and lower consumption. This is a good thing for the economy. But the best part is that sales tax revenues are much more stable than income taxes. Certainty in tax revenue leads to better planning, better investments and thus better government for Oregon.
Next, he argues that a sales tax isn't bad for the economy; in fact, when weighed against the costs of unstable state revenues, a sales tax would help the economy:
Oregon relies heavily on income taxes to fund its government and income taxes fluctuate widely with economic cycles. This cyclical revenue stream lends itself to inefficiencies, prohibiting many long-term investments, forcing closure of half-done programs and causes uncertainty that leads to underinvestment in general.....
Look at all of the states that have sales taxes, some go as high as 9% and over, and I don't see much correlation in the health of the economy, the presence of retail businesses and such with the tax rate. To put it another way, do you think that Oregon would look much different today if there had been a sales tax in place 50 years ago? Perhaps we would have better schools and such, but I doubt the retail climate would be much different.
The sales tax creates a perfect storm of opposition. Anti-taxers hate it not only because it's a tax, but because they recognize stable funding provides bureaucrats with fatter coffers to expand social programs and so on. But its doom is abetted by liberals who don't want to adopt a regressive tax.
So here's the question to BlueOregon progressives. Since we have seen the enormous harm our current system causes to important state programs, would you consider a non-regressive, necessities-exempt sales tax (perhaps including rebates) as a part of the solution?
Incidentally, Patrick has a survey about a sales tax, should you wish to express your opinion there.
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10:17 a.m.
Dec 19, '07
I meant to include my own opinion in the main post, but here's just as good. I would consider such a tax under these circumstances. It perhaps even offers an opportunity for Oregon to try out innovative public policy to see if a sales tax could be employed that was actually part of a progressive tax structure.
Because, we know that now the tax structure is pretty much flat when you consider all taxes and fees.
Dec 19, '07
I expect the State Senate to reform our tax structure intelligently and thinking toward the long-term. And we can do that without a sales tax. Hopefully now that my boy Mark Hass is back in Salem (I have more passion for my state senator than is maybe healthy, but he's really that cool, and it's great that he's back) we can have some real work on fixing taxes here.
Dec 19, '07
As long as the sales tax is included in the price. Also, I think any tax should phased in to avoid sticker shock.
Dec 19, '07
I'm so glad it's the Republicans pushing for sales taxes, thereby making it more likely that they will lose more seats in the legislature in 2008.
Oregonians aren't buying it, period. They're telling the liberals that they'll exempt necessities, and the conservatives that they're going to eliminate some of the other taxes. If you believe those things for one minute, I've got some land in Louisiana to sell you. I give those proposals a maximum of two legislative sessions before they would decide they needed more revenue and bring back all the other taxes so that we'd have the same taxes we have now, plus the sales tax too, on everything including groceries.
People who miss sales taxes should move back to California. And people who call themselves progressives and try to sell us sales taxes should be ashamed of themselves, and should shut up about it if they're interested in winning any elections.
Dec 19, '07
I'm so glad it's the Republicans pushing for sales taxes, thereby making it more likely that they will lose more seats in the legislature in 2008.
Mr. Alworth, you might want to think about changing your title to say, "Republicans: "Time for a sales tax?", so they don't associate it with Democrats.
Oregonians aren't buying it, period. They're telling the liberals that they'll exempt necessities, and the conservatives that they're going to eliminate some of the other taxes. If you believe those things for one minute, I've got some land in Louisiana to sell you. I give those proposals a maximum of two legislative sessions before they would decide they needed more revenue and bring back all the other taxes so that we'd have the same taxes we have now, plus the sales tax too, on everything including groceries.
People who miss sales taxes should move back to California. And people who call themselves progressives and try to sell us sales taxes should be ashamed of themselves, and should shut up about it if they're interested in winning any elections.
Dec 19, '07
I'm so glad it's the Republicans pushing for sales taxes, thereby making it more likely that they will lose more seats in the legislature in 2008.
Mr. Alworth, you might want to think about changing your title to say, "Republicans: "Time for a sales tax?", so they don't associate it with Democrats.
Oregonians aren't buying it, period. They're telling the liberals that they'll exempt necessities, and the conservatives that they're going to eliminate some of the other taxes. If you believe those things for one minute, I've got some land in Louisiana to sell you. I give those proposals a maximum of two legislative sessions before they would decide they needed more revenue and bring back all the other taxes so that we'd have the same taxes we have now, plus the sales tax too, on everything including groceries.
People who miss sales taxes should move back to California. And people who call themselves progressives and try to sell us sales taxes should be ashamed of themselves, and should shut up about it if they're interested in winning any elections.
11:09 a.m.
Dec 19, '07
No.
11:15 a.m.
Dec 19, '07
Perhaps a majority of voting Oregonians could be persuaded to support a progressive sales tax accompanied by an equivalent reduction in incomes taxes. I doubt it, but I would support it. I do think it would even out our state's revenue income. But my preferred alternative would be a significant carbon tax, also offset by equivalent aggregate income tax reductions, that would create strong economic incentives to conserve polluting energy sources and could contribute to a more enlightened foreign policy free from worrying about oil producing states. Unfortunately, my preferred alternative is even less like to enjoy Oregonian voter approval. But without a significant carbon tax nationally we are neither really confronting global warming nor creating an opportunity for smarter foreign policy. A significant carbon tax could be transformational, and Oregon could start.
Dec 19, '07
From down here in Eugene, where we're about to have tons of visitors and millions of dollars being infused into our economy with the Olympic trials and the next five years of track events, a sales tax looks pretty good to me. It might help even out the financial problems we continually have paying for pretty much anything, from schools to police to filling potholes.
11:40 a.m.
Dec 19, '07
Has a sales tax in Oregon ever been studied? Do we know a sales tax will help Oregon? I know there are a lot of opinions on both sides, but have there been any studies performed that back up either position?
Fred
Dec 19, '07
No, no and no! Sales taxes are still regressive no matter how you dress them up - people do buy more than just food and clothing...even poor people. The only thing 'progressive' about a sales tax is that once it's in, it never goes away and always goes up. Take this from the former resident of a certain state to the south of us - it was amazing to watch how many times and 'crises' required 'temporary' increases in the sales tax that never went away when I lived there. Better to reform the state tax system and close some loopholes so that all people and corporations pay their fair share. Sales tax? Don't go there.
Dec 19, '07
Sales taxes are just bad public policy. Why siphon the flow of private dollars by increasing the purchase price of everyday goods? It is utter lunacy. I am an honest progressive who feels that this is just not the place for tax. Period.
Better to kick the kicker and close corporate loopholes. Better to increase marginal tax rate in the highest income brackets. Better to work within the confines of our existing code to make them more progressive and harder to evade.
Why push people farther into the maw of 'Uncle Sam the Tax Man' by reminding them every single day of their societal dues, rather than just every two weeks and once a year?
Dec 19, '07
Sales taxes are just bad public policy. Why siphon the flow of private dollars by increasing the purchase price of everyday goods? It is utter lunacy. I am an honest progressive who feels that this is just not the place for a tax. Period.
Better to kick the kicker and close corporate loopholes. Better to increase marginal tax rate in the highest income brackets. Better to work within the confines of our existing code to make them more progressive and harder to evade.
Why push people farther into the maw of 'Uncle Sam the Tax Man' by reminding them every single day of their societal dues, rather than just every two weeks and once a year? People hate Government enough without the perception of a daily intrusion into their bank account. I really think sales taxes galvanize our opposition, as Jeff notes, and hurt our movement in the long term.
Dec 19, '07
The whole idea of a consumption tax (which a sales tax is a type of) vs. an income tax is that a consumption tax captures revenue from people who have normal to high consumption, but low income. This includes people that liberals are comfortable taxing (millionaire trust fund playboys) and people that liberals are probably less comfortable taxing (retired people on a “fixed income” or students living on loans). A consumption tax (such as a sales tax) is a good idea if you think that high consumption/low income individuals are a big loophole in our tax system. No matter how you cut it, a sales tax is going to be regressive, even if the use of rebates and exemptions blunts the impact somewhat. However, if the goal is a more stable source of funding, and one is willing to take significant political heat (which would be generated by a sales tax) there are other ways to stabilize revenue. One example would be a wealth tax, which many European nations use. Like a sales tax, this would capture the “lost” taxes from those who have significant financial assets, but low income. A second alternative (or additional alternative), could be replacing the kicker with a stabilization fund. Under this plan, money that would have gone out would instead be held in trust for years when the budget is under funded. This second option has the additional advantage of not being easily evaded on the gray market (which is a major failing of a sales tax).
Dec 19, '07
Jeff Alworth:
The sales tax creates a perfect storm of opposition. Anti-taxers hate it not only because it's a tax, but because they recognize stable funding provides bureaucrats with fatter coffers to expand social programs and so on.
Bob T:
Once again you use broad statements that don't recognize the various degrees of support and opposition to an issue. A lot of anti-taxers are fine with taxes up to a point, and afterwards don't want taxes that ass up to the government getting more. Nothing really wrong with that. Others would be happy to replace the income or property tax with a sales tax. Nothing wrong with that, either.
I like the sales tax over the others because it doesn't require an annual financial inquisition. One can pay it while wearing a ski mask, for example. Stupid terms like "under the table" income can go away.
Jeff Alworth:
But its doom is abetted by liberals who don't want to adopt a regressive tax.
Bob T:
Oh, pity. Look, a wealthy person like Soros or Barbara Streisand can spend hundreds of thousands of dollars (or millions) on taxable items while working grunts might spend perhaps $20 K tops. The wealthy will therefore be taxed more, so to speak.
Get off the "regressive" "progressive" nonsense regarding taxes.
Bob Tiernan
Dec 19, '07
I would be onboard for a sales tax. Unlike most of the conservative or libertarian yahoos on here, I understand the need for stable funding sources. A sales tax would also target tourists dollars as well. Beyond the 12%(?) Multnomah County tax on rental cars and hotels, visitors pay no taxes while in Oregon.
Unfortunately, being anti-tax is truly a zealous religion here in Oregon even more so than hating gays and lesbians. Oregon is one of the most selfish states that I have ever lived in when it comes to money. Most people here live for ME, rather than WE. This cultural reality is one that would take generations to change or a horrible natural disaster the likes of which we have never seen to wake people up. En lieu of this, no matter what "bargain" you place before the voters, they WILL reject it by overwhelming numbers. Even if Jesus himself came back and said, "Vote on this for the people"... the people would say, "Screw you, A-hole!"
Dec 19, '07
Absolutly not in favor of a sales tax, unless coupled with a top to bottom (Federal, State, and Local) overhaul. Simply adding another tax layer, that no matter how structured hits the least able to pay the hardest, only adds tax burden without any accountability. In every state that has added a new tax resource, whether a income or consumption tax, the total tax bill goes up, while the ability of government to provide services goes down.
Dec 19, '07
The whole idea of a consumption tax (which a sales tax is a type of) vs. an income tax is that a consumption tax captures revenue from people who have normal to high consumption, but low income. This includes people that liberals are comfortable taxing (millionaire trust fund playboys) and people that liberals are probably less comfortable taxing (retired people on a “fixed income” or students living on loans). A consumption tax (such as a sales tax) is a good idea if you think that high consumption/low income individuals are a big loophole in our tax system. No matter how you cut it, a sales tax is going to be regressive, even if the use of rebates and exemptions blunts the impact somewhat. However, if the goal is a more stable source of funding, and one is willing to take significant political heat (which would be generated by a sales tax) there are other ways to stabilize revenue. One example would be a wealth tax, which many European nations use. Like a sales tax, this would capture the “lost” taxes from those who have significant financial assets, but low income. A second alternative (or additional alternative), could be replacing the kicker with a stabilization fund. Under this plan, money that would have gone out would instead be held in trust for years when the budget is under funded. This second option has the additional advantage of not being easily evaded on the gray market (which is a major failing of a sales tax).
Dec 19, '07
[off-topic personal attack deleted. -editor.]
Dec 19, '07
Bob T:
Oh, pity. Look, a wealthy person like Soros or Barbara Streisand can spend hundreds of thousands of dollars (or millions) on taxable items while working grunts might spend perhaps $20 K tops. The wealthy will therefore be taxed more, so to speak.
JF:
The wealthy will also have hundreds of thousands of dollars (maybe millions) left over and still available for them to spend more. Poor and middle class people will have to spend a higher PERCENTAGE of their income on sales taxes with less available afterward. It's not the dollars, it's the percentage of income and what's left afterward that's the issue.
So, yes, I will stick to 'progressive' and 'regressive' when it comes to taxes. Sales taxes hit hardest the ones least able to afford it. Period.
Let the ones who get the most goodies from the government - the already-wealthy - pay more for them. It's the American way.
12:34 p.m.
Dec 19, '07
The "good for the economy" thing puzzles me since I'm continually bombarded with messages that what keeps the economy strong in general these days in the U.S. is consumer spending.
Also, in the interstate comparisons, I would be against a sales tax without clear evidence about how such taxes correlate to the living standards and degree of security and insecurity for the lower two income quintiles, and on some issues, maybe the lower three.
Do the "state programs" that get stabilized and related investments that Patrick touts work out in practice not just as a possibility convey benefits to those sectors of the population that will be paying proportionally more of what they earn (or borrow)? Or do the benefits go mainly to the best off? What are gini coefficients of sales tax states vs. not (or lesser vs. greater). If the result of a sales tax were more funds for the cultural trust organizations but continued statements that Portland "can't afford" small schools that work better, not interested.
In addition to the kicker & corporate loopholes I think we should restore property tax parity between business and residential property. A state luxury tax would meet my approval. A local option for municipal or county taxes on meals, lodging, ski lift tickets (ouch!) & other relative luxuries might meet the case raised about Eugene.
(With a meal tax we can revisit taxes as ostensible public health promoters -- whoopee!)
Dec 19, '07
I agree with Liberalincarnate.
The people who say sales tax hurts the poor are saying the details of how the tax package is constructed don't matter because everyone with half a brain should know that sales tax hurts the poor. I was part of the sales tax wars of the 1980s when some said even the statement "it is time to discuss a sales tax" made one "not a real Democrat". I have heard all the arguments.
If such necessities as food and medicine are exempted, then it is not necessarily a regressive tax. It would depend on the exemptions, rate structure, etc. A friend of mine who once managed a food court said he favored a restaurant tax which would be the equivalent of a nickel on the hot dogs the food court sold. He said he didn't think his patrons would mind a nickel more for a hot dog, and anyone who couldn't afford the extra nickel on a hot dog shouldn't be eating at the food court anyway--home prepared food is not only less expensive but healthier.
That said, I know there is a "sales tax over my dead body" wing of the Democratic Party. I know it was estimated as a very vocal 10% a couple decades ago. My statement to them is that if they don't like the sales tax they should propose an alternative and line up the votes for that alternative--not just complain.
Apparently Rep. Bruun and Sen. Morse are on the Revenue Restructure Task Force which will report to the 2009 session. If people here have strong feelings, they should communicate with that task force.
12:40 p.m.
Dec 19, '07
The "good for the economy" thing puzzles me since I'm continually bombarded with messages that what keeps the economy strong in general these days in the U.S. is consumer spending.
Also, in the interstate comparisons, I would be against a sales tax without clear evidence about how such taxes correlate to the living standards and degree of security and insecurity for the lower two income quintiles, and on some issues, maybe the lower three.
Do the "state programs" that get stabilized and related investments that Patrick touts work out in practice not just as a possibility convey benefits to those sectors of the population that will be paying proportionally more of what they earn (or borrow)? Or do the benefits go mainly to the best off? What are gini coefficients of sales tax states vs. not (or lesser vs. greater). If the result of a sales tax were more funds for the cultural trust organizations but continued statements that Portland "can't afford" small schools that work better, not interested.
12:44 p.m.
Dec 19, '07
The "good for the economy" thing puzzles me since I'm continually bombarded with messages that what keeps the economy strong in general these days in the U.S. is consumer spending.
Also, in the interstate comparisons, I would be against a sales tax without clear evidence about how such taxes correlate to the living standards and degree of security and insecurity for the lower two income quintiles, and on some issues, maybe the lower three.
Do the "state programs" that get stabilized and related investments that Patrick touts work out in practice not just as a possibility convey benefits to those sectors of the population that will be paying proportionally more of what they earn (or borrow)? Or do the benefits go mainly to the best off? What are gini coefficients of sales tax states vs. not (or lesser vs. greater). If the result of a sales tax were more funds for the cultural trust organizations but continued statements that Portland "can't afford" small schools that work better, not interested.
In addition to the kicker & corporate loopholes I think we should restore property tax parity between business and residential property. A state luxury tax would meet my approval. A local option for municipal or county taxes on meals, lodging, ski lift tickets (ouch!) & other relative luxuries might meet the case raised about Eugene.
(With a meal tax we can revisit taxes as ostensible public health promoters -- whoopee!)
12:47 p.m.
Dec 19, '07
What is up with all the "potential comment spam" notices?
Would our fearless leaders please address this issue as a distinct thread?
Are there tics of writing (scare quotes, other punctuation, sentence structure) we can/should avoid? Particular kinds of vocabulary?
Dec 19, '07
People who miss sales taxes should move back to California.
And people who call themselves progressives and try to push sales taxes should hang their heads in shame. If you think any "exemptions" for groceries would stick around longer than the next legislative session, I've got some swampland to sell you.
12:57 p.m.
Dec 19, '07
How does Patricks "good for the economy" square with media conventional wisom that consumer spending is what keeps the economy strong these days?
Also, in the interstate comparisons, I would be against a sales tax without clear evidence about how such taxes correlate to the living standards and degree of security and insecurity for the lower two income quintiles, and on some issues, maybe the lower three.
Do the "state programs" that get stabilized, and related investments that Patrick touts, work out in practice, not just as a possibility, to convey benefits to the people who will be paying proportionally more of what they earn (or borrow)?
Or do the benefits go mainly to the best off? What are gini coefficients of sales tax states vs. not (or lesser vs. greater).
If the result of a sales tax were more funds for the cultural trust organizations but continued statements that Portland "can't afford" small schools that work better, I'm not interested.
In addition to the kicker & corporate loopholes, I think we should restore property tax parity between business and residential property. A state luxury tax would meet my approval. A local option for municipal or county taxes on meals, lodging, ski lift tickets (ouch!) & other relative luxuries might meet the case raised about Eugene.
(With a meal tax we can revisit taxes as ostensible public health promoters -- whoopee!)
Yeah LT, lining up the votes is the trick, isn't it? Applies to sales taxes too, doesn't it?
Sales tax opponents actually have reasons why beyond, "it'll never get the votes." Do opponents of other options?
12:59 p.m.
Dec 19, '07
Can we move beyong personal opinions on the value of Sales Taxes? Does anyone have any hard data or know anyone that has any information on how a sales tax would be applied in Oregon?
To say we need it or we should not have it because it is regressive is just not productive right now. We have to resolve how we fund our govenment and something has to change. If the people of Oregon are to consider a sales tax...then we need informative discussions and sound information. Who will and can provide that? Can anyone here offer anything beyond personal opinions?
Fred
1:01 p.m.
Dec 19, '07
In the interstate comparisons, I would be against a sales tax without clear evidence about how such taxes correlate to the living standards and life security for the lower two income quintiles, or below median income housholds, in sales tax states vs. non-sales tax states, or in higher vs. lower sales tax states.
Do the state programs that get stabilized, and related investments that Patrick touts, work out in practice to convey more benefits to the people who will be paying proportionally more of what they earn (or borrow)? Or do they pay more and get less? In real life, not theory?
We should restore property tax parity between business and residential property. A state luxury tax would meet my approval. A local option for municipal or county taxes on meals, lodging, ski lift tickets (ouch!) & other relative luxuries might be good.
Dec 19, '07
Before Democrats go proposing anymore taxes, they need to define the following terms:
Progressive Regressive Rich Poor
Particularly with regards to rich/poor, Democrats should set a specific dollar amount which serves as the barrier between rich and poor. I think I understand what Democrats mean by progressive: they want to confiscate income earned by the rich and redistribute it to the poor. But who is rich and who is poor? If we're going to target the rich don't you think we should at least know who they are?
1:09 p.m.
Dec 19, '07
Fred, since as far as I know there are no concrete proposals going, I fear that no one actually can provide what you are asking.
Someone might have hard data about experiences in other states.
In principle we could discuss "soft" modelling data about what would be likely to happen under differently structured sales taxes.
Admiral Naismith, have any interest in buying the Cape Cod Canal? Massachusetts has had a sales tax that exempts food (except restaurant meals), clothing and books for at least 50 years -- other stuff too I think but those for sure. Connecticut when I lived there in the 1980s had a large list of exemptions and also got into weird territory of trying to distinguism "necessity" clothes from "luxury" clothes. Again the system had been around decades with necesessity exemptions.
Basic necessity exemptions are not inherently unstable.
Dec 19, '07
As a life long Oregonian, family here since the 1880's, I have to say that a "traditional" sales tax has no hope in this State.
But, non-traditional? Some of the features that Jeff notes such as non-regressive and necessity exempt are great, but the average voter doesn't pay that much attention to detail. If you want a sales tax, and I generally agree with the concept of tax diversification, you have to do something more radical.
My idea of an "Oregon" sales tax is to make it seasonal. If we had a sales tax in force from May 15 to Sept. 15 each year, we would capture lots of tourist dollars. But if I wanted to buy a car, I could do it from Sept. 16 to May 14 and not pay a sales tax. I would even be willing to include in the sales tax more of what we consider necessities, if we taxed the tourists on those items. I have no idea how much money a sales tax of this sort could raise. Tie it to the schools, and I think we might have a winner.
Dec 19, '07
Perhaps a sales tax proposal would pass if it also allowed self-serve gas stations.
Dec 19, '07
In the province of Alberta, their sales tax is insane. If you buy, say, a six pack of soda pop, there is no tax on that item, but if you buy less than that (say 1 bottle), then you are taxed. Same goes with every other food - and that is before the national GST is tacked on.
As you can see, once you get a tax on something, other smaller taxes will follow. My fiance in Rocky Mountain House, Alberta pays (for food) a town sales tax, provincial sales tax, and a National tax (GST). Then it gets more confusing with what happens with the above (the soda).
It's better not to have a sales tax at all than create confusion, panic, and frustration among the masses.
Dec 19, '07
OP: "would you consider a non-regressive, necessities-exempt sales tax (perhaps including rebates) as a part of the solution?"
My question: Define 'necessities'?
Dec 19, '07
In the province of Alberta, their sales tax is insane. If you buy, say, a six pack of soda pop, there is no tax on that item, but if you buy less than that (say 1 bottle), then you are taxed. Same goes with every other food - and that is before the national GST is tacked on.
As you can see, once you get a tax on something, other smaller taxes will follow. My fiance in Rocky Mountain House, Alberta pays (for food) a town sales tax, provincial sales tax, and a National tax (GST). Then it gets more confusing with what happens with the above (the soda).
It's better not to have a sales tax at all than create confusion, panic, and frustration among the masses.
Dec 19, '07
In the province of Alberta, their sales tax is insane. If you buy, say, a six pack of soda pop, there is no tax on that item, but if you buy less than that (say 1 bottle), then you are taxed. Same goes with every other food - and that is before the national GST is tacked on.
As you can see, once you get a tax on something, other smaller taxes will follow. My fiance in Rocky Mountain House, Alberta pays (for food) a town sales tax, provincial sales tax, and a National tax (GST). Then it gets more confusing with what happens with the above (the soda).
It's better not to have a sales tax at all than create confusion, panic, and frustration among the masses.
Dec 19, '07
In the province of Alberta, their sales tax is insane. If you buy, say, a six pack of soda pop, there is no tax on that item, but if you buy less than that (say 1 bottle), then you are taxed. Same goes with every other food - and that is before the national GST is tacked on.
As you can see, once you get a tax on something, other smaller taxes will follow. My fiance in Rocky Mountain House, Alberta pays (for food) a town sales tax, provincial sales tax, and a National tax (GST). Then it gets more confusing with what happens with the above (the soda).
It's better not to have a sales tax at all than create confusion, panic, and frustration among the masses.
Dec 19, '07
In the province of Alberta, their sales tax is insane. If you buy, say, a six pack of soda pop, there is no tax on that item, but if you buy less than that (say 1 bottle), then you are taxed. Same goes with every other food - and that is before the national GST is tacked on.
As you can see, once you get a tax on something, other smaller taxes will follow. My fiance in Rocky Mountain House, Alberta pays (for food) a town sales tax, provincial sales tax, and a National tax (GST). Then it gets more confusing with what happens with the above (the soda).
It's better not to have a sales tax at all than create confusion, panic, and frustration among the masses.
Dec 19, '07
In the province of Alberta, their sales tax is insane. If you buy, say, a six pack of soda pop, there is no tax on that item, but if you buy less than that (say 1 bottle), then you are taxed. Same goes with every other food - and that is before the national GST is tacked on.
As you can see, once you get a tax on something, other smaller taxes will follow. My fiance in Rocky Mountain House, Alberta pays (for food) a town sales tax, provincial sales tax, and a National tax (GST). Then it gets more confusing with what happens with the above (the soda).
It's better not to have a sales tax at all than create confusion, panic, and frustration among the masses.
Dec 19, '07
In the province of Alberta, their sales tax is insane. If you buy, say, a six pack of soda pop, there is no tax on that item, but if you buy less than that (say 1 bottle), then you are taxed. Same goes with every other food - and that is before the national GST is tacked on.
As you can see, once you get a tax on something, other smaller taxes will follow. My fiance in Rocky Mountain House, Alberta pays (for food) a town sales tax, provincial sales tax, and a National tax (GST). Then it gets more confusing with what happens with the above (the soda).
It's better not to have a sales tax at all than create confusion, panic, and frustration among the masses.
1:41 p.m.
Dec 19, '07
Steve, an intriguing suggestion on seasonal sales tax. Would you also exempt food and medicine during tax season?
Antoine,
progressive: tiered so that people with lower income pay less as a percentage.
flat: all incomes pay the same percentage of income in taxes.
regressive: the poor pay a higher percentage of income in taxes than the wealthy.
In this case, "poor" and "wealthy" are just relative terms.
Dec 19, '07
In the province of Alberta, their sales tax is insane. If you buy, say, a six pack of soda pop, there is no tax on that item, but if you buy less than that (say 1 bottle), then you are taxed. Same goes with every other food - and that is before the national GST is tacked on.
As you can see, once you get a tax on something, other smaller taxes will follow. My fiance in Rocky Mountain House, Alberta pays (for food) a town sales tax, provincial sales tax, and a National tax (GST). Then it gets more confusing with what happens with the above (the soda).
It's better not to have a sales tax at all than create confusion, panic, and frustration among the masses.
Dec 19, '07
In the province of Alberta, their sales tax is insane. If you buy, say, a six pack of soda pop, there is no tax on that item, but if you buy less than that (say 1 bottle), then you are taxed. Same goes with every other food - and that is before the national GST is tacked on.
As you can see, once you get a tax on something, other smaller taxes will follow. My fiance in Rocky Mountain House, Alberta pays (for food) a town sales tax, provincial sales tax, and a National tax (GST). Then it gets more confusing with what happens with the above (the soda).
It's better not to have a sales tax at all than create confusion, panic, and frustration among the masses.
Dec 19, '07
In the province of Alberta, their sales tax is insane. If you buy, say, a six pack of soda pop, there is no tax on that item, but if you buy less than that (say 1 bottle), then you are taxed. Same goes with every other food - and that is before the national GST is tacked on.
As you can see, once you get a tax on something, other smaller taxes will follow. My fiance in Rocky Mountain House, Alberta pays (for food) a town sales tax, provincial sales tax, and a National tax (GST). Then it gets more confusing with what happens with the above (the soda).
It's better not to have a sales tax at all than create confusion, panic, and frustration among the masses.
Dec 19, '07
In the province of Alberta, their sales tax is insane. If you buy, say, a six pack of soda pop, there is no tax on that item, but if you buy less than that (say 1 bottle), then you are taxed. Same goes with every other food - and that is before the national GST is tacked on.
As you can see, once you get a tax on something, other smaller taxes will follow. My fiance in Rocky Mountain House, Alberta pays (for food) a town sales tax, provincial sales tax, and a National tax (GST). Then it gets more confusing with what happens with the above (the soda).
It's better not to have a sales tax at all than create confusion, panic, and frustration among the masses.
1:49 p.m.
Dec 19, '07
Chris,
I hope you are wrong, but I fear you are spot on. If we do not have any credible data on how a sales tax would work in Oregon and what that revenue channel would mean for Oregon. We need to gather that information. We need to acept that how we fund our govenment is not working as well as we need it to work and we have to make some changes to the system in order to support our collective needs and expectations.
Question for eveyone:
If not a sales tax....how do we best address the shortfalls we will see in revenues in 2010 and there after?
With the growing number of renters in Oregon. isn't property taxes as regressive as a sales tax? Is increasing property tax unfair to low income and working poor families of Oregon?
Would a slaes tax be limited to the state or could counties and cities impose their own sales tax?
Fred
Dec 19, '07
In the province of Alberta, their sales tax is insane. If you buy, say, a six pack of soda pop, there is no tax on that item, but if you buy less than that (say 1 bottle), then you are taxed. Same goes with every other food - and that is before the national GST is tacked on.
As you can see, once you get a tax on something, other smaller taxes will follow. My fiance in Rocky Mountain House, Alberta pays (for food) a town sales tax, provincial sales tax, and a National tax (GST). Then it gets more confusing with what happens with the above (the soda).
It's better not to have a sales tax at all than create confusion, panic, and frustration among the masses.
Dec 19, '07
In the province of Alberta, their sales tax is insane. If you buy, say, a six pack of soda pop, there is no tax on that item, but if you buy less than that (say 1 bottle), then you are taxed. Same goes with every other food - and that is before the national GST is tacked on.
As you can see, once you get a tax on something, other smaller taxes will follow. My fiance in Rocky Mountain House, Alberta pays (for food) a town sales tax, provincial sales tax, and a National tax (GST). Then it gets more confusing with what happens with the above (the soda).
It's better not to have a sales tax at all than create confusion, panic, and frustration among the masses.
Dec 19, '07
In the province of Alberta, their sales tax is insane. If you buy, say, a six pack of soda pop, there is no tax on that item, but if you buy less than that (say 1 bottle), then you are taxed. Same goes with every other food - and that is before the national GST is tacked on.
As you can see, once you get a tax on something, other smaller taxes will follow. My fiance in Rocky Mountain House, Alberta pays (for food) a town sales tax, provincial sales tax, and a National tax (GST). Then it gets more confusing with what happens with the above (the soda).
It's better not to have a sales tax at all than create confusion, panic, and frustration among the masses.
Dec 19, '07
In the province of Alberta, their sales tax is insane. If you buy, say, a six pack of soda pop, there is no tax on that item, but if you buy less than that (say 1 bottle), then you are taxed. Same goes with every other food - and that is before the national GST is tacked on.
As you can see, once you get a tax on something, other smaller taxes will follow. My fiance in Rocky Mountain House, Alberta pays (for food) a town sales tax, provincial sales tax, and a National tax (GST). Then it gets more confusing with what happens with the above (the soda).
It's better not to have a sales tax at all than create confusion, panic, and frustration among the masses.
2:10 p.m.
Dec 19, '07
I'll ask again: Can anyone point to an example of a sales/consumption tax in place that's not regressive, i.e. does not shift more of the burden of the tax system onto the people in the bottom half of the income strata than the current system?
From my comment on the Westlund thread the other day:
Prove me wrong. Just find one example of a non-regressive sales tax. Do you seriously think this hasn't been tried before?
2:11 p.m.
Dec 19, '07
I'll ask again: Can anyone point to an example of a sales/consumption tax in place that's not regressive, i.e. does not shift more of the burden of the tax system onto the people in the bottom half of the income strata than the current system?
From my comment on the Westlund thread the other day:
Prove me wrong. Just find one example of a non-regressive sales tax. Do you seriously think this hasn't been tried before?
2:12 p.m.
Dec 19, '07
I'll ask again: Can anyone point to an example of a sales/consumption tax in place that's not regressive, i.e. does not shift more of the burden of the tax system onto the people in the bottom half of the income strata than the current system?
Prove me wrong. Just find one example of a non-regressive sales tax. Do you seriously think this hasn't been tried before?
2:15 p.m.
Dec 19, '07
Offering rebates to the poor on sales tax they pay isn't the solution. They're still going to have to forgo purchasing items they need right now because of the cost of the sales tax. There are lots of items the lower income levels buy that wouldn't be included in a exemption on food, medicine, and clothes. There are cleaning supplies, toilet paper, toiletries, etc. They also buy their kids presents for Christmas, birthdays, etc.
Back when Westlund was proposing a sales tax, I used the numbers the state provided to show that those at the lowest income levels would actually pay more taxes, middle income would see a slight drop, and the highest incomes would see the biggest drops in their taxes. That is definitely a regressive tax.
I'd have to see a really truly original plan for a sales tax before I could support it, as every one that has come up so far has shown in the numbers that the poorest people end up paying more.
Maybe none of you guys have ever lived off food stamps and literally had to watch to the penny how much you spent on each item (and I'm not talking about once or twice when you spent too much on Christmas or whatever, I'm talking about over a prolonged period). Or watch as family members on food stamps and welfare had to choose between having necessities like toilet paper and shampoo or being able to buy food. I watched it for years, and it is a terrible position to put people in who already don't have enough to eat.
2:16 p.m.
Dec 19, '07
Offering rebates to the poor on sales tax they pay isn't the solution. They're still going to have to forgo purchasing items they need right now because of the cost of the sales tax. There are lots of items the lower income levels buy that wouldn't be included in a exemption on food, medicine, and clothes. There are cleaning supplies, toilet paper, toiletries, etc. They also buy their kids presents for Christmas, birthdays, etc.
Back when Westlund was proposing a sales tax, I used the numbers the state provided to show that those at the lowest income levels would actually pay more taxes, middle income would see a slight drop, and the highest incomes would see the biggest drops in their taxes. That is definitely a regressive tax.
I'd have to see a really truly original plan for a sales tax before I could support it, as every one that has come up so far has shown in the numbers that the poorest people end up paying more.
Maybe none of you guys have ever lived off food stamps and literally had to watch to the penny how much you spent on each item (and I'm not talking about once or twice when you spent too much on Christmas or whatever, I'm talking about over a prolonged period). Or watch as family members on food stamps and welfare had to choose between having necessities like toilet paper and shampoo or being able to buy food. I watched it for years, and it is a terrible position to put people in who already don't have enough to eat.
2:43 p.m.
Dec 19, '07
There's a funny thing about the claims of stability associated with sales taxes. They're only stable when you don't exempt things like food and essentials. To maintain stability, you need to tax things that don't vary with the ups and downs of the economy.
Once you start exempting staples, a sales tax becomes more and more volatile, because the less it's based on things people need to buy, the more it's subject to the same ups and downs that the general economy is. When the economy is bad, people don't have as much discretionary money to spend, so they stop spending as much, which affects the sales tax income.
http://dor.wa.gov/Content/AboutUs/StatisticsAndReports/WAtaxstudy/Chapter_9.pdf
Page 4. Households under $20K pay 6.7% in retail sales taxes. That drops to 3.7% by the time you get to the median household income around $50K. If you make more than $130K (and who doesn't these days?) you only pay 2.2% in sales tax in WA.
Washington exempts most groceries and prescription drugs.
That's progressive for some people, I guess.
2:48 p.m.
Dec 19, '07
Darrelplant - The three main ways to make a sales tax less regressive are to only tax luxury items; to exclude basic necessities such as food, medicine, and rent; or to offer tax rebates or tax credits for people at lower income levels.
Of the three solutions, the only one that is likely to not be regressive in a significant way is the sales tax on luxury items such as jewelry, cars valued at more than $35,000, boats, rv's, etc. These sorts of products are fairly inelastic with regard to nominal changes in price.
Another consideration in this is a political one. The most likely way to get 36 members of the house to agree on a sales tax is to offer a revenue neutral "trade", such as the one being floated by Scott Bruun, that involves lowering something like capital gains in exchange for Republican votes on a sales tax. That sort of "deal" should be opposed at all costs.
If you want to make a real difference in tweaking tax policy, why not consider signing on to help Oregon kick the corporate kicker? www.kickthekicker.com.
Dec 19, '07
Would fans of a "progressive sales tax" please supply a list of states that have one, along with details on what they tax at what rates. If, as supporters claim, it's not so difficult to make sales tax progressive, then there should be plenty of examples around, n'est-ce pas?
3:01 p.m.
Dec 19, '07
How would taxing say... automobiles that cost more than $50k or jewelry costing more than $1k be at all regressive?
Those kinds of taxes may well be volitile, but that's a completely separate issue from regressivity/progressivity.
3:07 p.m.
Dec 19, '07
Who said that luxury taxes are regressive?
3:09 p.m.
Dec 19, '07
Let's see if I can get a small comment to actually go through... taxing only expensive automobiles and jewelry would be considered more of a "luxury tax" than a "sales tax" by people.
3:10 p.m.
Dec 19, '07
Sal, why have a sales tax at all? Why not adjust the income tax rates?
And you're wrong about how a sales tax can be made less regressive. Take a look at the WA sales tax figures I mentioned above. They've already got some exemptions, and households with incomes under $20K pay three times as much (as a portion of their income) as households with incomes over $130K. If you add more exemptions those percentages will go down across the board, unless they're means-tested, in which case you're going to get a hump somewhere in the middle of the middle class.
If you create some sort of credit system, the tax is still going to be regressive unless everyone's paying less than the 2.2% the "over $130K" bracket is paying. And since only a small percentage of households are in that bracket, you'd be essentially refunding half or more of the taxes you collected from almost every household. You'd be getting rid of the income tax kicker and instituting a sales tax kicker.
It'd be a lot less trouble to just add 2.2% (or whatever) to state income tax rates across the board if the intention is to increase revenue.
3:18 p.m.
Dec 19, '07
Darrelplant - I think you've misread what I wrote. All I did was list the three general approaches that are taken to make sales taxes less regressive. I very clearly said that the only form of a sales tax that is not likely to be regressive is a tax on luxury items.
The sales tax approach is a bad idea from a policy standpoint, because they tend to be regressive. It is also a bad idea from a political standpoint because Oregon voters just don't support a sales tax. Even if they did support one, the only way to get it passed in the legislature is to do something like cut capital gains, which would also serve to make the tax system more regressive.
3:20 p.m.
Dec 19, '07
I'm not sure, but I don't think luxury taxes could ever raise enough revenue by themselves.
Ben Westlund's SB382 proposal was supposed to add $1 billion (net) to the state coffers per biennium.
If you assumed a 5% luxury tax, to get $1 billion, you'd need to have pre-tax sales value of $20 billion.
Maybe I'm naive, but I don't think $10 billion of luxury cars or jewelry are sold in Oregon every year. That'd be the equivalent of 100,000 cars at $100,000 each. Bought in-state. Every year. By a population of 3 million.
3:23 p.m.
Dec 19, '07
Before anyone freaks out, I should have added that Westlund's bill was a sales tax bill. I was just trying to show what an equivalent revenue from a luxury tax would require.
3:28 p.m.
Dec 19, '07
Sal, I understood what you wrote, but as I tried to point out, those approaches don't actually make the sales tax less regressive for most of the people who pay it.
Dec 19, '07
I have this sheet someone gave me years ago (I don't remember who) that I've kept that lists percentages of Oregonians voting for "tax reform", including sales taxes (but excludes Measures 5 and 50 limiting property taxes):
1969 - Sales Tax - 11.4% 1973 - Property Tax limit, Income Tax increase - 41.5% 1974 - Corporate income tax, school funding increase - 25% 1985 - Sales Tax - 22.2% 1986 - Sales Tax - 22.3% 1986 - "more progressive" income tax - 29.4% 1992 - "split roll" property tax - 25.2% 1993 - Sales Tax - 25%
If any of the titles or descriptions of these measures are inaccurate, my apologies. I have not independently verified them all. I know that it's been 14 years since the last vote on a sales tax, but there is no evidence anywhere that the results would be any different, or even approach 30%.
3:40 p.m.
Dec 19, '07
Darrelplant - You are correct about the luxury tax not adding much revenue. Westlund's proposal included a regressive income tax and a regressive sales tax. It was bad public policy and I'm glad it didn't go anywhere (cue Stacy Dycus).
I see your point on the regressive issue. My point is that a sales tax with a tax rebate for low income families or exemptions for food and medicine is less regressive than a sales tax without such remedies. In either case, it's still putting perfume on a pig.
3:46 p.m.
Dec 19, '07
It's worth mentioning in light of Duke's comment that the most recent poll data for eliminating the corporate kicker showed that Oregonians support it by a 61-21 margin.
Dec 19, '07
Shortly after measure 5 passed, there was an attempt to pass a 1% sales tax dedicated to school funding. People were feeling desperate about the effects of measure 5 ...so school supporters pitched the 1% sales tax and pointed to it as the only tax business would support. We were assured that AOI (Associated Oregon Industries) would support it as well as other business interests. The issue was brought up before the Portland Rainbow Coalition and seriously divided the organization. Eventually, with great reluctance, we decided to endorse it.
Little did we know that the Oregon Intel Executive Staff was trying to get a Fab (chip fabrication plant) built in Oregon and decided a sales tax would be a big barrier to their bid. So Oregon Intel bigwigs decided to oppose it and AOI followed suit...And school supporters and progressives like those of us in the Rainbow were left holding the proverbial bag. Well, the measure got hammered at polls - I think it only received 25-28% of the vote - and the Intel Execs did not get their fab - it was built in Arizona.
That experience has made me very wary whenever a discussion of a sales tax comes up...progressives beware!
Dec 19, '07
"Our tax structure is crippling for many reasons. First, income tax rates on our work, our jobs, are among the highest in the nation, as is our tax rate on investment gains. If you believe that taxes affect behavior, that whatever activity we tax we get less of, then it's easy to see that Oregon's tax structure stifles incentives for work and investment".
It seems many have commented on the fairness of a sales tax, or lack thereof, but no one has tackled this position Brunn holds. Many believe that taxes will affect behavior, like a certain failed measure in November, so is a tax policy of high income taxes any different? Could more private investment, job creation, and higher wages offset the unfairness of a sales tax?
3:59 p.m.
Dec 19, '07
A. Vantimmerman -- You can probably get someone at the Cascade Policy Institute to write a paper in support of your hypothesis regardless of whether or not the data actually bears it out.
I wanted to also mention that in making a critical comment about Westlund's previous tax proposal, I neglected to give him credit for having the courage to discuss tax reform in the context of a political campaign. Not many politicians in oregon are willing to do that.
Dec 19, '07
Eliminating the corporate kicker and using at some of the revenue for a reserve fund would do a lot of what a "third leg" to the tax stool would do. As Sal notes, it also polls a lot better.
Dec 19, '07
Duke, I lived through maybe 6 of those votes. My problem with the opposition is they didn't provide alternatives, just tried to portray all who oppose them as the evil people the Bushies have called all of us who don't give W's policies unquestioning support. Sal's measure on the corporate kicker is a serious proposal. Anyone else who opposes current tax reform ideas should either sign on to his proposal or come up with an equally serious proposal.
Anyone who voted on the 1993 measure would be over 30 by now. It may well be that when the Revenue Restructuring Task Force finishes their work I won't like the result. But I think it is high time to have the debate.
In the 1980s, the juvenile level of some of the tax debate included an activist going on cable access TV and calling an elected Democratic legislator "not a good Democrat" for not supporting the activist's view on taxes, and turf battles of groups saying their proposal was good but the other side's proposal was bad--to the point some people tuned them out.
This state needs a stable revenue source. The alternative could well be another year with 5 special sessions. It is time to have open honest debate.
As I recall, Doyle and Minnis tried to push through his vague "bucket plan" which even some of his old allies questioned (in a committee hearing, one said it didn't seem in tune with realities like the cost of fuel for school buses and other public vehicles). But as much as they tried to make it a partisan matter, I seem to recall enough Republican senators had questions to refuse to provide a quorum or something like that. During that time, all "good people" were supposed to support the idea because no other idea was allowed to be discussed. Let's not repeat the narrowness of Minnis et al and say there are certain ideas which can't even be discussed.
It is time this issue engaged the younger generation, but that can't be done if a debate begins, "Oregonians have always...". Let's get the famous "5 under 35" legislators involved in this debate, as well as those who were in public school classrooms when the Measure 5 and 47/50 cuts took place and the people affected by the Measure 28 and 30 cuts.
I went to college in a sales tax state and it was awhile after moving to Oregon before I quit adding a percentage on to purchases when I was shopping. But I also have worked with visiting groups of students who went shopping while they were here. Their purchases were not taxed.
A sales tax in a complete package (perhaps one where teachers and retail clerks don't end up in roughly the same tax bracket as CEOs and professional athletes) would be worth discussing. Don't prejudge now what the discussion would be like, let's have the discussion and see what happens.
Dec 19, '07
Duke, I lived through maybe 6 of those votes. My problem with the opposition is they didn't provide alternatives, just tried to portray all who oppose them as the evil people the Bushies have called all of us who don't give W's policies unquestioning support. Sal's measure on the corporate kicker is a serious proposal. Anyone else who opposes current tax reform ideas should either sign on to his proposal or come up with an equally serious proposal.
Anyone who voted on the 1993 measure would be over 30 by now. It may well be that when the Revenue Restructuring Task Force finishes their work I won't like the result. But I think it is high time to have the debate.
In the 1980s, the juvenile level of some of the tax debate included an activist going on cable access TV and calling an elected Democratic legislator "not a good Democrat" for not supporting the activist's view on taxes, and turf battles of groups saying their proposal was good but the other side's proposal was bad--to the point some people tuned them out.
This state needs a stable revenue source. The alternative could well be another year with 5 special sessions. It is time to have open honest debate.
As I recall, Doyle and Minnis tried to push through his vague "bucket plan" which even some of his old allies questioned (in a committee hearing, one said it didn't seem in tune with realities like the cost of fuel for school buses and other public vehicles). But as much as they tried to make it a partisan matter, I seem to recall enough Republican senators had questions to refuse to provide a quorum or something like that. During that time, all "good people" were supposed to support the idea because no other idea was allowed to be discussed. Let's not repeat the narrowness of Minnis et al and say there are certain ideas which can't even be discussed.
It is time this issue engaged the younger generation, but that can't be done if a debate begins, "Oregonians have always...". Let's get the famous "5 under 35" legislators involved in this debate, as well as those who were in public school classrooms when the Measure 5 and 47/50 cuts took place and the people affected by the Measure 28 and 30 cuts.
I went to college in a sales tax state and it was awhile after moving to Oregon before I quit adding a percentage on to purchases when I was shopping. But I also have worked with visiting groups of students who went shopping while they were here. Their purchases were not taxed.
A sales tax in a complete package (perhaps one where teachers and retail clerks don't end up in roughly the same tax bracket as CEOs and professional athletes) would be worth discussing. Don't prejudge now what the discussion would be like, let's have the discussion and see what happens.
4:08 p.m.
Dec 19, '07
Oh, and as for the vaunted stability of sales taxes:
A.Vantimmerman, of course Oregon has one of the highest income taxes in the nation. We don't have a sales tax and the revenue has to come from somewhere.
You have to look at the overall tax burden, and there, Oregon's local and state tax burden is ranked below most of the other states: 36th according to CNN/Money.com in 2005. 9.6% of per-capita income compared to 10% in Washington state and Idaho. 10.3% in California.
What proponents of a sales tax -- apart from the ones who claim they want a <s>unicorn</s> progressive sales tax -- is to further shift the burden of local and state taxation from businesses and high-income earners to lower-income and middle-class earners. That's what Bruun means by how the current system stifles "incentives for work and investment". It makes them pay more taxes than they think they should. They'd like other people to pay those taxes for them, just like businesses prefer when local governments give them tax rebates when they promise to move into town.
4:22 p.m.
Dec 19, '07
I'm in favor. The damage to our state from having an unpredictable revenue stream outweighs my concerns about regressivity.
4:40 p.m.
Dec 19, '07
Oh, and as for the vaunted stability of sales taxes:
A.Vantimmerman, of course Oregon has one of the highest income taxes in the nation. We don't have a sales tax and the revenue has to come from somewhere.
You have to look at the overall tax burden, and there, Oregon's local and state tax burden is ranked below most of the other states: 36th according to CNN/Money.com in 2005. 9.6% of per-capita income compared to 10% in Washington state and Idaho. 10.3% in California.
What proponents of a sales tax -- apart from the ones who claim they want a <s>unicorn</s> progressive sales tax -- is to further shift the burden of local and state taxation from businesses and high-income earners to lower-income and middle-class earners. That's what Bruun means by how the current system stifles "incentives for work and investment". It makes them pay more taxes than they think they should. They'd like other people to pay those taxes for them, just like businesses prefer when local governments give them tax rebates when they promise to move into town.
4:41 p.m.
Dec 19, '07
Oh, and as for the vaunted stability of sales taxes:
A.Vantimmerman, of course Oregon has one of the highest income taxes in the nation. We don't have a sales tax and the revenue has to come from somewhere.
You have to look at the overall tax burden, and there, Oregon's local and state tax burden is ranked below most of the other states: 36th according to CNN/Money.com in 2005. 9.6% of per-capita income compared to 10% in Washington state and Idaho. 10.3% in California.
What proponents of a sales tax -- apart from the ones who claim they want a <s>unicorn</s> progressive sales tax -- is to further shift the burden of local and state taxation from businesses and high-income earners to lower-income and middle-class earners. That's what Bruun means by how the current system stifles "incentives for work and investment". It makes them pay more taxes than they think they should. They'd like other people to pay those taxes for them, just like businesses prefer when local governments give them tax rebates when they promise to move into town.
4:42 p.m.
Dec 19, '07
Oh, and as for the vaunted stability of sales taxes:
California's sales tax is ultimate roller coaster
...
In the 1980s and 1990s, Levy reports, the growth in taxable sales was the most volatile of the three major sources of government revenue. In both decades, taxable sales had the highest and lowest annual growth rates.
In the 1980s, sales growth swung from nearly 0 percent in 1982 to more than 14 percent two years later, then dropped to 4 percent again by 1986. In the 1990s, taxable sales actually declined by 4 percent early in the decade before rising steadily and peaking at a 12 percent annual growth rate in 2000. After that the growth rate plummeted again to zero. There's your true rollercoaster.
Overall, the sales tax base is also the slowest growing, rising at less than the rate of population growth and inflation since 1980. One reason is that more and more sales are falling outside the tax base as commerce shifts to the Internet, and services, which are untaxed, become a more significant part of the economy.
A.Vantimmerman, of course Oregon has one of the highest income taxes in the nation. We don't have a sales tax and the revenue has to come from somewhere.
You have to look at the overall tax burden, and there, Oregon's local and state tax burden is ranked below most of the other states: 36th according to CNN/Money.com in 2005. 9.6% of per-capita income compared to 10% in Washington state and Idaho. 10.3% in California.
What proponents of a sales tax -- apart from the ones who claim they want a <s>unicorn</s> progressive sales tax -- is to further shift the burden of local and state taxation from businesses and high-income earners to lower-income and middle-class earners. That's what Bruun means by how the current system stifles "incentives for work and investment". It makes them pay more taxes than they think they should. They'd like other people to pay those taxes for them, just like businesses prefer when local governments give them tax rebates when they promise to move into town.
4:43 p.m.
Dec 19, '07
Oh, and as for the vaunted stability of sales taxes:
A.Vantimmerman, of course Oregon has one of the highest income taxes in the nation. We don't have a sales tax and the revenue has to come from somewhere.
You have to look at the overall tax burden, and there, Oregon's local and state tax burden is ranked below most of the other states: 36th according to CNN/Money.com in 2005. 9.6% of per-capita income compared to 10% in Washington state and Idaho. 10.3% in California.
What proponents of a sales tax -- apart from the ones who claim they want a <s>unicorn</s> progressive sales tax -- is to further shift the burden of local and state taxation from businesses and high-income earners to lower-income and middle-class earners. That's what Bruun means by how the current system stifles "incentives for work and investment". It makes them pay more taxes than they think they should. They'd like other people to pay those taxes for them, just like businesses prefer when local governments give them tax rebates when they promise to move into town.
4:44 p.m.
Dec 19, '07
Oh, and as for the vaunted stability of sales taxes:
A.Vantimmerman, of course Oregon has one of the highest income taxes in the nation. We don't have a sales tax and the revenue has to come from somewhere.
You have to look at the overall tax burden, and there, Oregon's local and state tax burden is ranked below most of the other states: 36th according to CNN/Money.com in 2005. 9.6% of per-capita income compared to 10% in Washington state and Idaho. 10.3% in California.
What proponents of a sales tax -- apart from the ones who claim they want a <s>unicorn</s> progressive sales tax -- is to further shift the burden of local and state taxation from businesses and high-income earners to lower-income and middle-class earners. That's what Bruun means by how the current system stifles "incentives for work and investment". It makes them pay more taxes than they think they should. They'd like other people to pay those taxes for them, just like businesses prefer when local governments give them tax rebates when they promise to move into town.
4:45 p.m.
Dec 19, '07
Oh, and as for the vaunted stability of sales taxes:
4:46 p.m.
Dec 19, '07
A.Vantimmerman, of course Oregon has one of the highest income taxes in the nation. We don't have a sales tax and the revenue has to come from somewhere.
You have to look at the overall tax burden, and there, Oregon's local and state tax burden is ranked below most of the other states: 36th according to CNN/Money.com in 2005. 9.6% of per-capita income compared to 10% in Washington state and Idaho. 10.3% in California.
What proponents of a sales tax -- apart from the ones who claim they want a <s>unicorn</s> progressive sales tax -- is to further shift the burden of local and state taxation from businesses and high-income earners to lower-income and middle-class earners. That's what Bruun means by how the current system stifles "incentives for work and investment". It makes them pay more taxes than they think they should. They'd like other people to pay those taxes for them, just like businesses prefer when local governments give them tax rebates when they promise to move into town.
4:48 p.m.
Dec 19, '07
Oh, and as for the vaunted stability of sales taxes:
4:49 p.m.
Dec 19, '07
Oh, and as for the vaunted stability of sales taxes (I can't get this link to post through the spam filter):
California's sales tax is ultimate roller coaster
...
In the 1980s and 1990s, Levy reports, the growth in taxable sales was the most volatile of the three major sources of government revenue. In both decades, taxable sales had the highest and lowest annual growth rates.
In the 1980s, sales growth swung from nearly 0 percent in 1982 to more than 14 percent two years later, then dropped to 4 percent again by 1986. In the 1990s, taxable sales actually declined by 4 percent early in the decade before rising steadily and peaking at a 12 percent annual growth rate in 2000. After that the growth rate plummeted again to zero. There's your true rollercoaster.
Overall, the sales tax base is also the slowest growing, rising at less than the rate of population growth and inflation since 1980. One reason is that more and more sales are falling outside the tax base as commerce shifts to the Internet, and services, which are untaxed, become a more significant part of the economy.
4:50 p.m.
Dec 19, '07
Oh, and as for the vaunted stability of sales taxes: California's sales tax is ultimate roller coaster
4:52 p.m.
Dec 19, '07
Spam filter wouldn't let me post this as part of the previous comment:
In the 1980s and 1990s, Levy reports, the growth in taxable sales was the most volatile of the three major sources of government revenue. In both decades, taxable sales had the highest and lowest annual growth rates.
In the 1980s, sales growth swung from nearly 0 percent in 1982 to more than 14 percent two years later, then dropped to 4 percent again by 1986. In the 1990s, taxable sales actually declined by 4 percent early in the decade before rising steadily and peaking at a 12 percent annual growth rate in 2000. After that the growth rate plummeted again to zero. There's your true rollercoaster.
Overall, the sales tax base is also the slowest growing, rising at less than the rate of population growth and inflation since 1980. One reason is that more and more sales are falling outside the tax base as commerce shifts to the Internet, and services, which are untaxed, become a more significant part of the economy.
4:53 p.m.
Dec 19, '07
Spam filter wouldn't let me post this as part of the previous comment:
In the 1980s and 1990s, Levy reports, the growth in taxable sales was the most volatile of the three major sources of government revenue. In both decades, taxable sales had the highest and lowest annual growth rates.
In the 1980s, sales growth swung from nearly 0 percent in 1982 to more than 14 percent two years later, then dropped to 4 percent again by 1986. In the 1990s, taxable sales actually declined by 4 percent early in the decade before rising steadily and peaking at a 12 percent annual growth rate in 2000. After that the growth rate plummeted again to zero. There's your true rollercoaster.
4:59 p.m.
Dec 19, '07
So paul g, you don't have a problem with the regressivity of a sales tax hitting low and middle-income Oregonians twice as hard as it does high-income Oregonians so long as it's predictable. What if you know it's not predictable, either? I mean, unless the economy is good. Probably still for it because it'll pull in those big tourist and black market economy dollars, right? Because those are stable, I'm sure.
5:30 p.m.
Dec 19, '07
Funny how this topic comes up again as Ben Westlund ramps up his campaign for Treasurer. Quite the coincidence.
Maybe it's going to be Ben and his old buddies on the Republican side of the Senate making some bipartisan sales tax stew (from the website of Sen. Gary George [R-McMinnville]).
6:18 p.m.
Dec 19, '07
How is a sales tax regressive?
If everyone has to pay the same sales tax and the tax is based on what we buy?
Doesn't the fact the more people make usually means they will spend more thus may more taxes mean anything?
What are the pros and cons of taxing or not taxing staples?
Isn't taxing luxury items only an unfair tax for people that make more money?
Is taxing lunry items penalizing people for doing well?
Fred
7:04 p.m.
Dec 19, '07
Fred,
Take a look at Darrel's post at Dec 19, 2007 2:43:50 PM above. It gives a concrete example of why a flat rate tax is regressive (same is true for payroll taxes like FICA).
The low-income group under $20,000/year (=$10.00/hr job full time) pays on average 6.7% of their total income even with most food excluded. They have less income to start with, and little if any "disposable" income.
At this level of income, 6.7% (1/15th) is actually a huge chunk of what's left after housing, transport, & food & clothes untaxed. It could cause real problems.
As you go up the income ladder, people pay less as a proportion of total incomes that have more wiggle room ("disposable income"), i.e. it will be easier for them to absorb.
So a flat rate tax is regressive because it imposes the greatest new hardship on those already facing the greatest hardships.
My take on luxury taxes and progressive income taxes is that the people who benefit most from society have a corresponding duty to do more to help it run well and help provide decent conditions of life for everyone -- which in fact increases the value of being wealthy. It's not a punishment.
Dec 19, '07
We could eliminate the "instability" problem of the income tax with a spending cap based on long-term growth of Oregon's tax base. Any money that comes in over the cap could be banked in a rainy day fund, and tapped in years when revenue dropped.
Get rid of the kicker but don't spend every dollar that comes in every year, and most of the problems of "instability" go away.
I'd rather look at fixing our property tax limitation system before we start looking at a sales tax. Property tax is a VERY stable source of revenue, but the tax limits we have in place are arbitrary, irrational, and crippling to local governments. Measures 5/50 are NOT the only way to limit property taxes. We need a better solution.
If we want to capture more tourist dollars (which seems to be a standard argument for sales tax), look at a statewide hotel/motel tax and auto rental tax. Residents will pay a little; tourists will pay a lot.
7:24 p.m.
Dec 19, '07
How I would view the choice of accepting some degree of regressivity for the sake of revenue stability has a great deal to do with where the benefits of the stability would go.
If we had a system like that in Washington state per Darrel's figures, I have great fear that the costs to the lowest income groups would be more than economic. I think it would throw more lives into turmoil, making barely sustainable rents unaffordable and forcing moves, or homelessness, increasing psychological stresses inside families leading to violence and divorce. There would be decreasing lifespan and loss of productivity due to health effects of worsening diets and increased stress, while economic costs of poor health to society & insurance premiums would rise.
Who would get the benefits of stability gained from imposing those burdens on the worst off? Often it is the particularly vulnerable in ways that may include but aren't restricted to income who pay costs of revenue down cycles. Biennium before last it made me sick to watch elder care, disability services, mental health, preventive public safety (e.g. drug rehab), K-12 schools and higher ed. pitted against one another.
But stability also gives a lot of benefits to the better off, and selling a sale tax to the bulk of middle class voters would focus on those benefits as opposed to the lesser proportional economic costs to their incomes.
This feels to me like in effect a political campaign for a sales tax will be an effort to mobilize an alliance of the best off and the middle income against the interests of poor working families and the lower middle class, particularly those teetering on the edge of poverty. I can't find motivation to help such a campaign.
If someone could persuade me that greater revenue stability would disproportionately benefit those who will pay disproportionately, beyond making sure there's more funding to ameliorate the falls of those pushed over various edges, I'd listen to the arguments. But that's what it would take to change my mind.
7:25 p.m.
Dec 19, '07
How I would view the choice of accepting some degree of regressivity for the sake of revenue stability has a great deal to do with where the benefits of the stability would go.
If we had a system like that in Washington state per Darrel's figures, I have great fear that the costs to the lowest income groups would be more than economic.
I think it would throw more lives into turmoil, making barely sustainable rents unaffordable and forcing moves, or homelessness, increasing psychological stresses inside families leading to violence and divorce. There would be decreasing lifespan and loss of productivity due to health effects of worsening diets and increased stress, while economic costs of poor health to society & insurance premiums would rise.
7:29 p.m.
Dec 19, '07
(pt. II from above)
Who would get the benefits of stability gained from imposing those burdens on the worst off? Often it is the particularly vulnerable in ways that may include but aren't restricted to income who pay costs of revenue down cycles. Biennium before last it made me sick to watch elder care, disability services, mental health, preventive public safety (e.g. drug rehab), K-12 schools and higher ed. pitted against one another.
But stability also gives a lot of benefits to the better off, and selling a sale tax to the bulk of middle class voters would focus on those benefits as opposed to the lesser proportional economic costs to their incomes.
This feels to me like a political campaign for a sales tax will be an effort to mobilize an alliance of the best off and the middle income around their interests in stable funding, against the more fundamental interests of poor working families and the lower middle class, particularly those teetering on the edge of poverty. I can't find motivation to help such a campaign.
If someone could persuade me that greater revenue stability would disproportionately benefit those who will pay disproportionately, and be put in even greater risk, beyond making sure there's more funding to ameliorate the falls of those pushed over various edges, I'd listen to the arguments. But that's what it would take to change my mind.
7:32 p.m.
Dec 19, '07
How I would view the choice of accepting some degree of regressivity for the sake of revenue stability has a great deal to do with where the benefits of the stability would go.
If we had a system like that in Washington state per Darrel's figures, I have great fear that the costs to the lowest income groups would be more than economic. I think it would throw more lives into turmoil, making barely sustainable rents unaffordable and forcing moves, or homelessness, increasing psychological stresses inside families leading to violence and divorce. There would be decreasing lifespan and loss of productivity due to health effects of worsening diets and increased stress, while economic costs of poor health to society & insurance premiums would rise.
Who would get the benefits of stability gained from imposing those burdens on the worst off? Often it is the particularly vulnerable in ways that may include but aren't restricted to income who pay costs of revenue down cycles. Biennium before last it made me sick to watch elder care, disability services, mental health, preventive public safety (e.g. drug rehab), K-12 schools and higher ed. pitted against one another.
But stability also gives a lot of benefits to the better off, and selling a sale tax to the bulk of middle class voters would focus on those benefits as opposed to the lesser proportional economic costs to their incomes.
This feels to me like in effect a political campaign for a sales tax will be an effort to mobilize an alliance of the best off and the middle income against the interests of poor working families and the lower middle class, particularly those teetering on the edge of poverty. I can't find motivation to help such a campaign.
7:39 p.m.
Dec 19, '07
If we got a system like that in Washington state per Darrel's figures, I fear that the costs to the lowest income groups would be more than economic. I think it would throw more lives into turmoil, making barely sustainable rents unaffordable and forcing moves, or homelessness, and increase psychological stresses inside families leading to violence and divorce. Not across the board, of course, but for too many.
I think there would be decreasing lifespan and loss of productivity due to health effects of worsening diets and increased stress, while economic costs of poor health to society & insurance premiums would rise.
Who would get the benefits of stability gained from imposing those burdens on the worst off? Often it is the particularly vulnerable in ways that may include but aren't restricted to income who pay costs of revenue down cycles.
In the biennium before last it made me sick to watch elder care, disability services, mental health, preventive public safety (e.g. drug rehab), K-12 schools and higher ed. pitted against one another. I see that. Yet insofar as income in hand may be a preventive measure for many social ills, I fear that we might be trading prevention for less effective post-facto amelioration.
Stability also gives a lot of benefits to the better off. That's not a problem in itself. But selling a sale tax to the bulk of middle class voters would focus on those benefits as being greater than the costs to their incomes.
This give me a disturbing picture of a political campaign for a sales tax. It looks like an effort to mobilize an alliance of the best off and the middle income for their interests in stability. And that that effort would be against the more fundamental interests of poor working families and the lower middle class, particularly those teetering on the edge of poverty. I can't find motivation to help such a campaign.
Dec 19, '07
Thank you Chris for saying everything that I was thinking but probably wouldn't have been able to say as clearly as you just did in the post 2 above mine.
Any flat tax is by definition a regressive tax. Yes they can be made 'less' regressive but they are still regressive.
Any citizen in todays world, with all of the economic data we have available at our fingertips via the web, who would accept a sales tax to help "keep the tax structure stable" is a fool pure and simple.
If you want a stable tax structure increase the rates at the high end and close loopholes that are currently being used by corporations to avoid paying over a Billion (yes that's billion with a "B") dollars of tax each year.
No sales tax in Oregon
7:48 p.m.
Dec 19, '07
If we got a system like that in Washington state per Darrel's figures, I fear that the costs to the lowest income groups would be more than economic. I think it would throw more lives into turmoil, making barely sustainable rents unaffordable and forcing moves, or homelessness, and increase psychological stresses inside families leading to violence and divorce. Not across the board, of course, but for too many.
I think there would be decreasing lifespan and loss of productivity due to health effects of worsening diets and increased stress, while economic costs of poor health to society & insurance premiums would rise.
In the biennium before last it made me sick to watch elder care, disability services, mental health, preventive public safety (e.g. drug rehab), K-12 schools and higher ed. pitted against one another. I see that.
Yet insofar as income in hand may be a preventive measure for many social ills, I fear that we might be trading prevention for less effective post-facto amelioration.
Stability also gives a lot of benefits to the better off. That's not a problem. But selling a sale tax to the bulk of middle class voters would focus on those benefits as being greater than the costs to their incomes.
This give me a disturbing picture of a political campaign for a sales tax. It looks like an effort to mobilize an alliance of the best off and the middle income for their interests in stability. And like that effort would be against the more fundamental interests of poor working families and the lower middle class, particularly those teetering on the edge of poverty. I can't find motivation to help a campaign that tries to unite the top two thirds against the bottom third.
7:53 p.m.
Dec 19, '07
Per Darrel's Washington figures, I fear that the costs to the lowest income groups would be more than economic. I fear more lives in turmoil, barely sustainable rents becoming unaffordable and forcing moves, or homelessness. I fear increased psychological stresses inside families leading to more violence and divorce.
I fear decreasing lifespan and loss of productivity due to health effects of worsening diets and increased stress. Costs of poor health to society & insurance premiums would rise.
In the biennium before last it made me sick to watch elder care, disability services, mental health, preventive public safety (e.g. drug rehab), K-12 schools and higher ed. pitted against one another. I see that.
Yet for many social ills we might be trading prevention via income in hand for less effective post-facto amelioration.
Selling a sale tax to the bulk of middle class voters would have to focus on benefits to them as being greater than the costs to their incomes.
This give me a disturbing picture of a political campaign for a sales tax, as an effort to mobilize an alliance of the best off and the middle income for their interests in stability. And like that effort would be against the more fundamental interests of poor working families and the lower middle class, particularly those teetering on the edges of various risks related to poverty.
I can't find motivation to help a campaign that tries to unite the top two thirds against the bottom third.
7:59 p.m.
Dec 19, '07
Per Darrel's Washington figures, I fear that the costs to the lowest income groups would be more than economic.
Worries: more lives in turmoil, barely sustainable rents becoming unaffordable and forcing moves, or homelessness. More psychological stresses inside families leading to more violence and divorce.
Poorer diets and raised stress could decrease lifespans and productivity through poorer health. Costs of poor health to society & insurance premiums could rise.
A few years ago it made me sick to watch various human needs pitted against one another. Yet for many social ills we might be trading prevention via income in hand for less effective post-facto amelioration.
Selling a sale tax to the bulk of middle class voters would have to focus on benefits to them as being greater than the costs to their incomes.
This give me a disturbing picture of a political campaign for a sales tax. It looks like an effort to mobilize an alliance of the best off and the middle income for their interests in stability, against more fundamental interests of poor working families and the lower middle class.
I can't find motivation to help a campaign that tries to unite the top two thirds against the bottom third.
8:05 p.m.
Dec 19, '07
Middle class people would benefit from greater revenue stability. So would important programs for various special needs and at risk populations who have been pitted against one another too much in recent years.
Yet I fear that the costs to the lowest income groups would be more than economic, and that for many social ills we'd be trading prevention via income at hand for post facto amelioration of harms by the tax.
Worries: more lives in turmoil, barely sustainable rents becoming unaffordable and forcing moves, or homelessness. More psychological stresses inside families leading to more violence and divorce.
Poorer diets and raised stress could decrease lifespans and productivity through poorer health. Costs of poor health to society & insurance premiums could rise.
I get a disturbing picture of a political campaign for a sales tax. It looks like an effort to mobilize an alliance of the best off and the middle income for their interests in stability as being greater than the cost in taxes.
It looks like it wouldn't take account of the more fundamental interests of poor working families and the lower middle class, and be effectively against their interests, even if not overtly.
I won't help a campaign that in effect tries to unite the top two thirds against the bottom third. Leave that to the Reaganites.
8:07 p.m.
Dec 19, '07
Middle class people would benefit from greater revenue stability. So would important programs for various special needs and at risk populations who have been pitted against one another too much in recent years.
Yet I fear that the costs to the lowest income groups would be more than economic, and that for many social ills we'd be trading prevention via income at hand for post facto amelioration of harms by the tax.
Worries: more lives in turmoil, barely sustainable rents becoming unaffordable and forcing moves, or homelessness. More psychological stresses inside families leading to more violence and divorce.
Poorer diets and raised stress could decrease lifespans and productivity through poorer health. Costs of poor health to society & insurance premiums could rise.
8:08 p.m.
Dec 19, '07
I get a disturbing picture of a political campaign for a sales tax. It looks like an effort to mobilize an alliance of the best off and the middle income for their interests in stability as being greater than the cost in taxes.
It looks like it wouldn't take account of the more fundamental interests of poor working families and the lower middle class, and be effectively against their interests, even if not overtly.
I won't help a campaign that in effect tries to unite the top two thirds against the bottom third. Leave that to the Reaganites.
Dec 19, '07
Chris, I respect what you have written in the past, but not your "leave that to the Reaganites" comment.
Either we continue to have an unstable tax system or we have to change it. I respect the person who said maybe we should kick the kicker rather than have a sales tax. That is a specific proposal. I think adding several more tax brackets to the few in the current Oregon income tax system would make the income tax more progressive (meaning the rich pay more). I think every tax break should be discussed openly and sunsetted if it doesn't have support when the light of day hits it (lobbyists wouldn't like that one!). I believe we need to have the kind of open debate of all facets of the Oregon tax system which we haven't seen in more than a decade.
My income is in the bottom third and I don't like being told there is no sales tax proposal on the face of the earth which could do anything but harm people like me. Absent a serious discussion of our tax system, we have gimmicks like Measure 28 and Measure 30. A job I applied for in the public sector no longer existed after the Measure 28 cuts--but that is better than a sales tax?
Let's see the details of the actual proposals before passing judgement on generalities.
Dec 19, '07
Are the same people who want a sales tax the same who wanted a cigarette tax?
Maybe we should only have sales taxes on cigarettes? ... and beer? ... and gasoline? ... and _?
That way we can sneak it by the luddite Repugnatious anti-tax knuckle draggers, since we wouldn't call it a 'sales' tax, but multiple 'sin' taxes.
Works for me. Besides, I won't pay it, 'cause I am a healthy, granola eating, latte sippin', bike rider creative type who lives in the Pearl.
8:49 p.m.
Dec 19, '07
Wow, quite a discussion. Darrel, quit waffling and tell us what you think, willya?
I haven't dug into the data yet, but I know that Governing Mag does an biennial review, looking at states on revenue fairness and stability. States with sales taxes have done well in the past in both categories--but, as Darrel points out, also poorly. When you look at any single data point in isolation, it doesn't tell you the whole picture.
However, since Darrel is in a challenging mood, I'll put a question back to him: what is the cost to middle- and low-income Oregonians for the loss of services during economic downturns like we had in '02-'03 and how do you balance this against the regressivity of one of your tax elements? I haven't heard enough discussion of the value of reliable services; cost is only one side of the equation--you gotta look at benefits, too.
Dec 19, '07
Rep. Bruun calls for revenue neutral tax reform. Does that mean cutting services in one area to pay for services in another area? So what would be cut to pay for the state police or other essential services in a downturn?
Jeff is right, as are the people who say we currently have a feast or famine tax structure. Should the people dumped from the Oregon Health Plan during recession say that was better than having a sales tax? Overcrowded schools better than having a sales tax?
Dec 19, '07
How do we solve the funding issue. Here's a good idea. Eliminate all Federal deductions from Oregon taxable income. That way, EVERYONE gets to pay more in taxes. I know this will do well here since everyone feels an obligation to support those services we love so much.
11:07 p.m.
Dec 19, '07
Jeff, I apologize for the way things got chopped into pieces above, because perhaps you missed it, but the link to the piece about the California sales tax shows that -- despite the common lore about sales taxes being stable -- they are not necessarily guaranteed to be non-volatile or predictable. During the '80s and '80s, California's sales tax income growth rate ranged between 14% and -4%. Search for the word "rollercoaster" in the comments. And as everyone knows, California's had its share of fiscal problems over the past decade or two.
The Washington study I linked to at Oregon Economics Blog also talks about the volatility of their tax system:
Their sales and use taxes are actually the "most volatile" portion of their system, with an elasticity of 1.4.
I'll let someone else come up with the Oregon figures on income tax elasticity. Surely someone who's arguing that the sales tax is a better option than the income tax will know what that figure is.
Jeff, I have looked at the Governing magazine tax report. It's not biennial. The last one they did was in 2003 (http://www.governing.com/gpp/2003/gp3or.htm). And as I mentioned in a comment on the Westlund post the other day, the issue about stability is more to do with making sure the money you need is there, not so much about how the money is extracted from the populace. Although Oregon does get high marks for tax fairness (something Rep. Bruun appears to have missed) and management in the star ratings, revenue's considered inadequate.
Why is it inadequate? Because it doesn't bring in enough money. One way to bring in more money would be to raise the existing tax rates. Another would be to add in a new tax scheme that is slanted against the middle class and the poor (i.e. regressive) while reducing income taxes and rates on things like capital gains that most people don't pay on a regular basis, once again moving more of the tax burden from the upper income taxpayers and large businesses to someone else.
So I don't really know the answer to your question, Jeff, because even states with regressive sales tax systems that had economic downturns had to scale back services.
Fred, a sales tax is regressive because people in higher income levels don't tend to spend as much of their income on items that are subject to sales taxes. They can afford to save a higher percentage of their income, for one. Therefore, they pay a smaller percentage of their income in sales taxes than middle income or low income earners. And that is the definition of "regressive". Progressive is the opposite, where the higher your income the higher a percentage you pay. Strictly speaking, a flat tax is a flat tax. It's not progressive or regressive, but it's still Steve Forbes creepy.
So. I've provided plenty of documentation -- and I have a lot more -- but I'm getting tired of always being the one doing the research. Nobody's paying me. I can't get a nice academic paper out of this; I've been out of college for nearly two decades.
Where's this progressive sales tax everyone's always talking about? It comes up in conversation here all the time; anyone seen some figures? Plaster casts of its big feet? Maybe a blurry movie or two? Something other than legends?
11:09 p.m.
Dec 19, '07
Jeff, I apologize for the way things got chopped into pieces above, because perhaps you missed it, but the link to the piece about the California sales tax shows that -- despite the common lore about sales taxes being stable -- they are not necessarily guaranteed to be non-volatile or predictable. During the '80s and '80s, California's sales tax income growth rate ranged between 14% and -4%. Search for the word "rollercoaster" in the comments. And as everyone knows, California's had its share of fiscal problems over the past decade or two.
The Washington study I linked to at Oregon Economics Blog also talks about the volatility of their tax system:
Their sales and use taxes are actually the "most volatile" portion of their system, with an elasticity of 1.4.
I'll let someone else come up with the Oregon figures on income tax elasticity. Surely someone who's arguing that the sales tax is a better option than the income tax will know what that figure is.
11:10 p.m.
Dec 19, '07
Jeff, I apologize for the way things got chopped into pieces above, because perhaps you missed it, but the link to the piece about the California sales tax shows that -- despite the common lore about sales taxes being stable -- they are not necessarily guaranteed to be non-volatile or predictable. During the '80s and '80s, California's sales tax income growth rate ranged between 14% and -4%. Search for the word "rollercoaster" in the comments. And as everyone knows, California's had its share of fiscal problems over the past decade or two.
The Washington study I linked to at Oregon Economics Blog also talks about the volatility of their tax system:
Analysis of short-run elasticity for Washington showed an overall elasticity of 1.2.
This means that tax revenues are considerably more volatile than the economy; tax revenues grow faster than the economy in good economic times and contract more than the economy in poor economic times.
Their sales and use taxes are actually the "most volatile" portion of their system, with an elasticity of 1.4.
I'll let someone else come up with the Oregon figures on income tax elasticity. Surely someone who's arguing that the sales tax is a better option than the income tax will know what that figure is.
11:11 p.m.
Dec 19, '07
Jeff, I apologize for the way things got chopped into pieces above, because perhaps you missed it, but the link to the piece about the California sales tax shows that -- despite the common lore about sales taxes being stable -- they are not necessarily guaranteed to be non-volatile or predictable. During the '80s and '80s, California's sales tax income growth rate ranged between 14% and -4%. Search for the word "rollercoaster" in the comments. And as everyone knows, California's had its share of fiscal problems over the past decade or two.
The Washington study I linked to at Oregon Economics Blog also talks about the volatility of their tax system:
Their sales and use taxes are actually the "most volatile" portion of their system, with an elasticity of 1.4.
I'll let someone else come up with the Oregon figures on income tax elasticity. Surely someone who's arguing that the sales tax is a better option than the income tax will know what that figure is.
I have looked at the Governing magazine tax report. It's not biennial. The last one they did was in 2003 (http://www.governing.com/gpp/2003/gp3or.htm). And as I mentioned in a comment on the Westlund post the other day, the issue about stability is more to do with making sure the money you need is there, not so much about how the money is extracted from the populace. Although Oregon does get high marks for tax fairness (something Rep. Bruun appears to have missed) and management in the star ratings, revenue's considered inadequate.
Why is it inadequate? Because it doesn't bring in enough money. One way to bring in more money would be to raise the existing tax rates. Another would be to add in a new tax scheme that is slanted against the middle class and the poor (i.e. regressive) while reducing income taxes and rates on things like capital gains that most people don't pay on a regular basis, once again moving more of the tax burden from the upper income taxpayers and large businesses to someone else.
So I don't really know the answer to your question, Jeff, because even states with regressive sales tax systems that had economic downturns had to scale back services.
Fred, a sales tax is regressive because people in higher income levels don't tend to spend as much of their income on items that are subject to sales taxes. They can afford to save a higher percentage of their income, for one. Therefore, they pay a smaller percentage of their income in sales taxes than middle income or low income earners. And that is the definition of "regressive". Progressive is the opposite, where the higher your income the higher a percentage you pay. Strictly speaking, a flat tax is a flat tax. It's not progressive or regressive, but it's still Steve Forbes creepy.
So. I've provided plenty of documentation -- and I have a lot more -- but I'm getting tired of always being the one doing the research. Nobody's paying me. I can't get a nice academic paper out of this; I've been out of college for nearly two decades.
Where's this progressive sales tax everyone's always talking about? It comes up in conversation here all the time; anyone seen some figures? Plaster casts of its big feet? Maybe a blurry movie or two? Something other than legends?
11:13 p.m.
Dec 19, '07
Jeff, I apologize for the way things got chopped into pieces above, because perhaps you missed it, but the link to the piece about the California sales tax shows that -- despite the common lore about sales taxes being stable -- they are not necessarily guaranteed to be non-volatile or predictable. During the '80s and '80s, California's sales tax income growth rate ranged between 14% and -4%. Search for the word "rollercoaster" in the comments. And as everyone knows, California's had its share of fiscal problems over the past decade or two.
The Washington study I linked to at Oregon Economics Blog also talks about the volatility of their tax system:
11:33 p.m.
Dec 19, '07
I can't get my longer answer to this through the damn filter but:
"what is the cost to middle- and low-income Oregonians for the loss of services during economic downturns like we had in '02-'03 and how do you balance this against the regressivity of one of your tax elements?"
What's to balance? California's sales taxes are more volatile than their income taxes. That's from two decades of hard data, not theoretical economics. And they had to cut services in hard times.
So I just have to question why anyone would want to take a progressive income tax system and replace part of it with a potentially more volatile, regressive sales tax system? It doesn't make any sense to me.
11:34 p.m.
Dec 19, '07
I can't get my longer answer to this through the damn filter but:
"what is the cost to middle- and low-income Oregonians for the loss of services during economic downturns like we had in '02-'03 and how do you balance this against the regressivity of one of your tax elements?"
What's to balance? California's sales taxes are more volatile than their income taxes. That's from two decades of hard data, not theoretical economics. And they had to cut services in hard times.
So I just have to question why anyone would want to take a progressive income tax system and replace part of it with a potentially more volatile, regressive sales tax system? It doesn't make any sense to me.
11:35 p.m.
Dec 19, '07
I can't get my longer answer to this through the damn filter but:
What's to balance, Jeff? California's sales taxes are more volatile than their income taxes. That's from two decades of hard data, not theoretical economics. And they had to cut services in hard times.
So I just have to question why anyone would want to take a progressive income tax system and replace part of it with a potentially more volatile, regressive sales tax system? It doesn't make any sense to me.
11:36 p.m.
Dec 19, '07
Seriously. I'm going to start charging y'all for the time I'm spending with this damn filter.
11:37 p.m.
Dec 19, '07
I can't get my longer answer to this through the damn filter but:
What's to balance, Jeff? California's sales taxes are more volatile than their income taxes. That's from two decades of hard data, not theoretical economics. And they had to cut services in hard times.
So I just have to question why anyone would want to take a progressive income tax system and replace part of it with a potentially more volatile, regressive sales tax system? It doesn't make any sense to me.
11:39 p.m.
Dec 19, '07
http://findarticles.com/p/articles/mi_qn4176/is_20030717/ai_n14555332
California's sales taxes are more volatile than their income taxes. That's from two decades of hard data, not theoretical economics. And they had to cut services in hard times.
So I just have to question why anyone would want to take a progressive income tax system and replace part of it with a potentially more volatile, regressive sales tax system? It doesn't make any sense to me.
11:40 p.m.
Dec 19, '07
Jeff, I apologize for the way things got chopped into pieces above, because perhaps you missed it, but the link to the piece about the California sales tax shows that -- despite the common lore about sales taxes being stable -- they are not necessarily guaranteed to be non-volatile or predictable. During the '80s and '80s, California's sales tax income growth rate ranged between 14% and -4%. Search for the word "rollercoaster" in the comments. And as everyone knows, California's had its share of fiscal problems over the past decade or two.
The Washington study I linked to at Oregon Economics Blog also talks about the volatility of their tax system:
Their sales and use taxes are actually the "most volatile" portion of their system, with an elasticity of 1.4.
I'll let someone else come up with the Oregon figures on income tax elasticity. Surely someone who's arguing that the sales tax is a better option than the income tax will know what that figure is.
I have looked at the Governing magazine tax report. It's not biennial. The last one they did was in 2003 (www.governing.com/gpp/2003/gp3or.htm). And as I mentioned in a comment on the Westlund post the other day, the issue about stability is more to do with making sure the money you need is there, not so much about how the money is extracted from the populace. Although Oregon does get high marks for tax fairness (something Rep. Bruun appears to have missed) and management in the star ratings, revenue's considered inadequate.
Why is it inadequate? Because it doesn't bring in enough money. One way to bring in more money would be to raise the existing tax rates. Another would be to add in a new tax scheme that is slanted against the middle class and the poor (i.e. regressive) while reducing income taxes and rates on things like capital gains that most people don't pay on a regular basis, once again moving more of the tax burden from the upper income taxpayers and large businesses to someone else.
So I don't really know the answer to your question, Jeff, because even states with regressive sales tax systems that had economic downturns had to scale back services.
Fred, a sales tax is regressive because people in higher income levels don't tend to spend as much of their income on items that are subject to sales taxes. They can afford to save a higher percentage of their income, for one. Therefore, they pay a smaller percentage of their income in sales taxes than middle income or low income earners. And that is the definition of "regressive". Progressive is the opposite, where the higher your income the higher a percentage you pay. Strictly speaking, a flat tax is a flat tax. It's not progressive or regressive, but it's still Steve Forbes creepy.
So. I've provided plenty of documentation -- and I have a lot more -- but I'm getting tired of always being the one doing the research. Nobody's paying me. I can't get a nice academic paper out of this; I've been out of college for nearly two decades.
Where's this progressive sales tax everyone's always talking about? It comes up in conversation here all the time; anyone seen some figures? Plaster casts of its big feet? Maybe a blurry movie or two? Something other than legends?
1:21 a.m.
Dec 20, '07
Can anyone clean up the duplicate posts?
2:03 a.m.
Dec 20, '07
LT, "revenue neutral" usually means that any increase in revenue in one area is offset by decreases in others. Every dollar increase in sales tax revenue, for instance, would be neutralized by reductions in income or capital gains taxes. I don't know if that's the way Bruun is using the term, but that's the standard usage.
That's why whether a sales tax proposal is progressive or regressive is so important. The income tax system is progressive. Any adjustment to the tax structure that replaces progressively-derived revenue with revenue from regressive sources -- whether that is a sales tax or some other plan -- means that some percentage of the tax burden is shifted to lower-income earners.
3:28 a.m.
Dec 20, '07
Yup. Though I'm leaving them there for a bit for the TypePad people to examine. They're claiming that the filter was fixed - and then your comment was flagged.
Dec 20, '07
When corporations start paying a fair share of taxes, the rest of us will have tax relief. Nike & PGE paying $200, $10 for their annual tax bill is insane!
9:23 a.m.
Dec 20, '07
Thanks, Kari. I was trying a variety of changes to get messages through (removing hrefs, blockquotes, etc.) that sometimes seemed to work and sometimes not, but I guess it still logged every attempt. Sort of makes me look psycho, and I can do for some people that without the repetition, thank you very much.
LT, "revenue neutral" typically doesn't have anything to do with spending. It means that for every dollar added by a new revenue stream, reductions are made elsewhere, so that the overall amount of revenue collected is not changed. That's why I have such a hard time understanding the call for a sales tax, because most of the plans propose replacing money raised through progressive income taxes with sales tax revenue that -- from all of the evidence I've seen -- is a regressive system. It's a further shifting of the tax burden from large businesses and higher-income earners to small businesses, and mid and low-level earners.
Is it really any surprise that people who pay the most under the current tax system would like to see their taxes reduced and have someone else pick up the tab?
Dec 20, '07
Jeff, rich/poor are NOT relative terms. If you want to target the high-earners and redistribute their wealth to low-earners, you have to define exactly where rich and poor separate.
Dec 20, '07
1) It's unlikely Oregonians will ever pass a sales tax. It's just too easy to run an anti-sales tax campaign (and to fund it), or to run against legislators that vote for it.
2) Nobody seems to be thinking about all the retail sales that would be lost in Oregon if a significant sales tax came in. Years ago, I read that Deschutes County had over $1 Billion in retail sales, at a time when it had well less than 100,000 citizens, implying something like $15,000 per capita RETAIL sales (not your mortgage, utilities, etc). Why? skiers come and spend money because there's no tax. I'm not saying making Bend a retail paradise has been a undisputed good thing (it's one reason I'm now Displaced from there) but economically all those un-sales-taxed sales have to be generating some wages and taxes.
3) People with large disposable incomes aren't (all) stupid. They quickly realize the way to avoid state sales tax is to buy whatever it is over the internet from another state. A National sales tax would avoid that problem but that's a whole 'nother thing.
4) Not pumping gas and being able to add up your bill in your head before you get to the cash register are integral to being an Oregonian.
10:18 a.m.
Dec 20, '07
Since Darrelplant keeps quoting "Westlund's" SB 382, I need to provide a few corrections.
First, that bill was the product of extensive work done by the Revenue Coalition that included OEA, AFL and other groups looking out for Oregon's working families.
Second, he said time & time again that if someone had a better solution to stabilize Oregon's revenues and reduce our dependency on the income tax where people under the poverty level are taxed almost as much as those who are well off, he would get on board.
Third, after traveling the state discussing this and listening to Oregonians, he is becoming increasingly convinced that a consumption tax (BAT, VAT or sales) will only pass if we eliminate income or property tax. Eliminating income tax would require a huge consumption tax to make up the difference so he is leaning towards elimination of property tax on values under $1.2M.
Oregon has a tax incidence modeling program that demonstrates how all of these machinations would affect people. They don't just make this up. Our current system is pretty regressive. Changing it could be an improvement.
10:38 a.m.
Dec 20, '07
Apparently Typepad held all of the comments that some of us who couldn't get through the filter sent in different permutations and then dumped all of them on the blog.
Paradoxically this creates a spam-like effect.
If I'd known that would happen I wouldn't have kept trying. Sorry, although I didn't know.
10:39 a.m.
Dec 20, '07
Stacey, I don't see how your information "corrects" anything I said about SB382. It was a Ben Westlund bill. On the web site for his gubernatorial run (which is still up: http://benforgovernor.com/issues_taxreform.php) he calls it: "my proposed tax reform plan".
You say that our current tax system is pretty regressive and that "changing it would be an improvement". But I fail to see how trading something you see as regressive for something that is even more regressive is an improvement.
You also make the claim that a consumption tax would stabilize the economy, but as I've pointed out above, California's sales tax is more volatile than its income tax. So your proposal is to create a more regressive tax system that could be even more volatile than the current one (the least volatile portion of the CA tax system is property taxes, the thing you're talking about eliminating).
As for just making this up, yes, the OTIM is just made up. It's a computer model. I've been programming simulations and games for more than a quarter of a century, and a computer model is only as good as the assumptions made when it's written. If you program the model to assume that sales taxes are less elastic than they actually are, then you're going to get a result that indicates they'd be a good idea. GIGO, as we used to say.
On the other hand, if you look at real-world data that contradicts your assumptions about the elasticity of sales tax variability, who are you going to believe: OTIM or reality?
10:41 a.m.
Dec 20, '07
BTW, Stacey, do you have any documentation for your claim that the current Oregon tax system is "pretty regressive"?
10:51 a.m.
Dec 20, '07
Never mind. Got Chuck Sheketoff's thing from 2003 here.
http://www.ocpp.org/2003/nr030107.htm
Of course that report mentions that in the 1990s:
And oddly enough, property and income tax cuts are what is usually proposed to offset even more regressive sales taxes. Hmmmm.
10:55 a.m.
Dec 20, '07
Eliminating income tax would require a huge consumption tax to make up the difference so he is leaning towards elimination of property tax on values under $1.2M.
Boy, that will really cause the poor to get hit hard with increased taxes. While some poor people may own the residence where they live, the bulk of poor people live in rental units. Do you really think that landlords are going to drop their rates because property taxes are eliminated?
Dec 20, '07
Stacey Dycus,
Oregon's tax system may be regressive, but it is to a significantly lesser degree than are the tax systems of states with general sales tax. I have asked for a list of states with a progressive sales tax, and no one has provided that; possibly because the list would have fewer than one entry.
11:26 a.m.
Dec 20, '07
Make Corporations Pay Taxes,
Comments like this make progressives look ignorant. (could this be a racist right republican trying to make liberals look bad?) Lets hope the marketing team at Nike does not visit Blue Oregon and decide to pull the same PIMP slap Intell pulled a few years ago. Nike pays a ton of taxes. is it enough...maybe not, but if they left Oregon or were given the right to stop paying taxes you would see their investment in Oregon is worth a lot more to the people of this state than whatever meger taxes you put in.
This thread is a good one and we do not need any 9th grade logic thrown in to muddy the waters. You would better serve yourself by reading and learning like I am.
Nuff said.
Fred
11:35 a.m.
Dec 20, '07
Overused Oxymorons:
Dec 20, '07
Nike pays "a ton of taxes" Hardly. I suppose PGE's $10 annual tax is a "ton of taxes", too.
Dec 20, '07
Perhaps Make Corporations Pay Taxes read this:
"The primary reason corporate income taxes will remain so low through thecurrent decade is Oregon’s phase-in of a major tax break aimed at reducing corporate income taxes for multistate companies with large amounts of propertyand payroll in Oregon, but few in-state sales, such as Intel and Nike."
and this:
"In 2002, the most recent year with available data, 69 percent of Oregon corporations paid the $10 minimum. Among corporations with Oregon sales over $25 million, 51 percent paid $10."
here: Executive Summary
and assumed that Nike was one of the corporations that has paid only $10 in corporate tax in some year. How much state corporate tax has Nike paid in the past 10 years?
Dec 20, '07
Gerik:
Sales taxes are just bad public policy. Why siphon the flow of private dollars by increasing the purchase price of everyday goods? It is utter lunacy.
Bob T:
You mean it's better to tax people in a way that is easier for them to tune out and not notice all that well? Like income taxes where people are so used to "take home pay" that they don't even think about what isn't there.
There's a reason the government won't return to the days when we had to send in all of our taxes in one shot, prior to withholding. That made people think -- and the government doesn't want us to think about this too much.
Bob Tiernan
12:04 p.m.
Dec 20, '07
Is that the only fee they pay in Oregon? What $10 fee/tax are you referring to? If you do not know what you are talking about....will you agree to register as a republican? You would do more help for the hard working people of Oregon if you were on the other side. We have a lot of tax/revenue issues ahead and the last thing we need in the room is a gang of sound bite swapping know nothing about business bobble heads spouting off that corporations do not pay taxes and then bring up Nike.
We have to change the tax system and we need fruitful discussions on how to move in the right direction. Misleading sound bites does nothing but muddy the waters of the debate. I think Intel proved a few years ago anyone that feels they do not pay taxes is about as smart dodo bird. The same laws that provoke intel to pay taxes is the someone that provokes Nike. As for PGE, you know they pay hundreds of millions in taxes, however, they flaunt theres hundreds of millions more they collect from us they do not pay. You want to do something....come up with a sound way to change that.
Fred
Dec 20, '07
Duke Shepard:
I have this sheet someone gave me years ago (I don't remember who) that I've kept that lists percentages of Oregonians voting for "tax reform", including sales taxes (but excludes Measures 5 and 50 limiting property taxes):
[list deleted>/i>
Bob T:
I'm glad Those numbers are low for sales tax approval. People are not stupid -- they don't want the leeches to get that third leg of the stool (after they do, eventually, they'll insist we need a fourth leg of the chair).
Anyway, those numbers would be higher if a ballot measure for a sales tax comes with an elimination of the income tax if the sales tax passes.
Bob Tiernan
12:11 p.m.
Dec 20, '07
Tom Civiletti,
You are addressing one tax in 3 doozen that cororpations have to pay. You really think that Nike only pays $10 in taxes in Oregon?
Maybe we need to have a rule...only people on the left side of the table that have actually owned and operated corproations should comment on this issue as anyone else is as amusing and credible as a bobble head in the wind. These knobs are bringing out the angry negro in me today.
Fred
Dec 20, '07
Yes, I know all about the fact that a poor person pays a greater percentage of his income on sales tax than a wealthy person does.
But doesn't the overall amount matter to you?
If a wealthy person has to pay a 50% tax rate on income while a poorer person pays 10%, then you're saying that the wealthy person has less of a right to his income.
Bob Tiernan
Dec 20, '07
Fred,
Are you having a bad day? Why would you conclude that folks posting here have no idea how Oregon's tax system works? I believe you are the only one who did not instantly understand that Make Corporations Pay Taxes referred to the state corporate tax - which is, by the way, the main tax collected from corporations by the state of Oregon. We have no VAT. We have no sales tax. Property tax goes to local government. Federal tax goes to the feds.
12:35 p.m.
Dec 20, '07
Or, you're realizing that there's a certain amount of overhead that is needed to maintain a household (rent, food, heat, transportation, etc.), you're realizing that there are certain services that need to be paid for by the government (education, roads, police, fire, etc.), and you're taxing people in a manner that puts the most burden of maintaining a stable society on the people who profit most from the benefits of a stable society.
And as Ms. Dykus pointed out, after the federal income tax offset is taken into account, even the state income tax is regressive under the current rates.
Dec 20, '07
"If a wealthy person has to pay a 50% tax rate on income while a poorer person pays 10%, then you're saying that the wealthy person has less of a right to his income."
Or you realize that capitalism is a flawed economic system that requires redistribution of wealth in order to prevent inhumane outcomes. That is what most progressives believe and is not some new-fangled idea.
Rightists believe that capitalism is God's system, and so have a difficult time understanding those who would meddle with received truth - or else they believe that Milton Friedman was God, to the same effect.
Dec 20, '07
Bob T:
If a wealthy person has to pay a 50% tax rate on income while a poorer person pays 10%, then you're saying that the wealthy person has less of a right to his income.
Tom Civiletti:
Or you realize that capitalism is a flawed economic system that requires redistribution of wealth in order to prevent inhumane outcomes.
Bob T:
Here comes the violin music!
But oh, c'mon, Tom. You mentioned a few weeks ago that you dislike the "extreme" economic systems, the flaws etc, but what the heck is so great about the "managed" economy? A managed economy gives us George Bush getting millions for a baseball stadium, and young black females being told they cannot do cornrows hairdos without a license, and taxi cab monopolies etc.
Besides, capitalism does NOT require redistribution of income just because you say so.
Tom Civiletti: That is what most progressives believe and is not some new-fangled idea.
Bob T:
Yup. Many bad ideas have been around for ages.
Tom Civilleti:
Rightists believe that capitalism is God's system
Bob T:
Excuse me! I'm an atheist, and so are loads of free marketers (the real ones, not the Republican types).
Tom Civilleti:
, and so have a difficult time understanding those who would meddle with received truth - or else they believe that Milton Friedman was God, to the same effect.
Bob T:
He had a lot of good ideas.
Bob Tiernan
Dec 20, '07
Bob,
Capitalism does not require redistribution of wealth just because I believe so. I'm sure you are you capable of generating a reading list on the topic for yourself. You won't find my name on it, most likely.
And I am amazed at how much free market atheists are willing to accept on faith in direct contradiction to the facts. I guess you practice faith-based atheism.
Milton Friedman's major contribution to the world was obliterating memory of Adam Smith's warnings about capitalism's shortcomings.
Dec 20, '07
I know of exactly not one progressive sales tax, they are by nature and necessity regressive. The next problem is the cost they add to doing business by making the retailer the tax collector. Increasing the progressiveness of the OR income tax would help stability, it relies entirely too heavily on those first to fall. Keeping both the corp & individual kickers only makes sense, but only if that fund is actually set aside - and we all know how difficult that is. The decrease in capital gains tax is absolute hokum, that kind of money is alread FICA exempt and in real income terms is treated as though the beneficiaries are poverty stricken.
I've lived in sales tax states, quite a few of them. The businesses and purchasers all just live with it, grudgingly, but the losers in the equation are both unlikely to realize how they're being gouged and just as unlikely to vote. Wonder why it works?
Dec 20, '07
Tom: And I am amazed at how much free market atheists are willing to accept on faith in direct contradiction to the facts. I guess you practice faith-based atheism.''
I LOVE that quote! I'm gonna use it the very next chance I get. Sharpening the contradictions! If Milton Friedman is "God" to the economic Righties, John Maynard Keynes is "God" to us Lefties.
One of the reasons people vacation in Oregon is because we don't have a sales tax. Not having a sales tax is good for business, good for local economies and good for Oregon.
Bottom line on a Sales Tax: It's a flat tax. Flat taxes hurt moderate and low income the hardest.
If you make $10,000 a year and pay a 10% flat tax, (sales tax or whatever) that leaves you with $9,000 for the year to live on. $9K won't buy you a lot a freedom. But, if you make $10,000,000 per year, that'll leave you with $9 million a year. Last time I checked, including that whole little inflation thing, $9 million bucks will buy you a lot of freedom.
Sales tax that doesn't tax "non-essentials." Betcha $50 bucks that men will be the ones deciding what is and isn't a "non-essential." I'd love to see the list of non-essentials if it should ever come to fruition.
BTW: Bob T. Are you the former Lake Oswego rep. guy? Or the one who lives out in Gresham who does lots and lots of LTE's to the Gresham Outlook?
3:12 p.m.
Dec 20, '07
According to the state tourism commission, about half of the overnight tourists in Oregon were from...Oregon.
3:25 p.m.
Dec 20, '07
Tom Civiletti,
I have operated a company that had sales in the millions and I paid that tax you are referring to along with many other taxes my corproation had to pay. My companies might not have had to pay and INCOME tax however, if you total up how many other taxes fees it paid in order to be a good business in Oregon I think you will find that amount to be healthy. What you and others are doing is akin to stating a woman is unattractive because she has a wrinkle on her chin or judge she is fat because she is not as skinny as the latest playboy model. It is silly political sound biting that does nothing but tell small business people you can not trust a liberal as far as you can toyota.
So yes, I have a bad day anytime a liberal spouts off about something they know little of. It just gets my negro going like you would not belive.
Tim, how much in payroll taxes are you sending to Salem this year? Not talking about your personal taxes. I mean for total for all of those living wage jobs you have created and funded this year.
Remember, there are some taxes and fees some corprations have to pay even if it did not make one cent in profit.
Fred
4:24 p.m.
Dec 20, '07
As I was out running errands and going to meetings, I was thinking on this comment:
Eliminating income tax would require a huge consumption tax to make up the difference so he is leaning towards elimination of property tax on values under $1.2M.
Unless there were a provision in this that eliminated property taxes on rental property, then it wouldn't matter if the landlord was willing to pass along tax breaks (which most wouldn't). Most multi-family rental properties would receive no tax break. Apartment complexes are typically going to be well over $1.2M in value. For instance, the complex I am in now is valued at $23,320,320. My old complex is valued at $16,475,880. Even complexes in Rockwood at valued well over $1.2M (the ones I looked up were often over $10M, with the smaller complexes around $3M).
5:08 p.m.
Dec 20, '07
One more word on computer models.
Raise your hand if you happened to get a kicker check recently. Did you? Well you got one because despite the best efforts of computer models (and human prediction) the Department of Revenue miscalculated the amount of money it would bring in through income taxes. Now, that's despite the fact that Oregon has been collecting income taxes for, oh, a loooong time.
Yet we're supposed to believe that "Oregon has a tax incidence modeling program that demonstrates how all of these machinations would affect people." Well, it does have the program. But how accurate is it?
5:15 p.m.
Dec 20, '07
LT, Sorry if you didn't like my Reaganite comment, but I'm just saying that the nature of a reform campaign matters to me. We've had a quarter century and more of class war in which the partisans of the really well-off persuade people in the middle to do stuff that hurts people in the bottom half.
But you're right that I'm jumping ahead of things in saying that, I guess.
Your proposal to pair a possible sales tax with a more steeply progressive income tax is rather different than what someone else said upthread about accepting a sales tax only if it were paired with a comparable reduction in the income tax.
If we were to put expanded income tax exemptions at the lower end of the scale (Oregon taxes income, if not from the first dollar, remarkably far down) into your suggestion, that would help a bit too. For my money the effects would need to be felt far enough up the income scale to "hold harmless" the working poor and seriously mitigate the effects on lower-middle class incomes.
Someone near the beginning also made an interesting point about how sales taxes get money from people who aren't paying taxes on earned income. That person linked investment income (which is taxed but at a lower rate, not sure if that income enters into Oregon taxable income or not) and untaxed retiree income. I'd be worried about lower income elders. Maybe there could be some sort of elder sales tax credit to offset that problem.
One thing the open debate needs to include is questioning the assumption that the only problem is instability, and that current revenues are adequate. A full debate on this would need to examine what has been cut as a result of the various tax cuts. Funding for OPB and the Historical Society (both of which I support and one of which I worked for as a project contract worker) maybe doesn't need restoring. But schools, universities, Oregon Health Plan (esp. in light of SB 329), services for disabled and elders, state police, road & bridge infrastructure maintenance, repair and replacement all have been starved.
In that context your point about people who were dropped from the OHP is apt. My question is how do we deal with that without pushing another set of people into a situation where they need OHP (but maybe aren't eligible?) e.g. a $10/hr worker whose employer offers some kind of health insurance that the worker scrimps to buy but having another 5% of income go to sales tax doesn't leave the space in the budget any more. To deal with this kind of problem we have to look not just at the stability but the size of the revenue stream.
At which point we come up against the person who commented up thread that he or she would only accept a sales tax if it was offset by a reduction in the income tax.
I wonder if we could persuade Jeff A. to start a new thread more or less on this same topic, maybe reframed as "Sales tax pt II: Yes, no, altnernatives, combinations?" Maybe include with a list of the several suggestions that have been made.
Dec 20, '07
Fred Stewart,
I also operate a business and pay the taxes that are due. Whoopee for both of us. That has little to do with the fact that Oregon's large corporations are not paying their share of the state budget. They receive services from the state. They use public infrastructure provided by the state to generate profits. They do not pay, though. You can get huffy about the issue, but your attitude doesn't make you right.
6:13 p.m.
Dec 20, '07
Another thing that needs questioning is whether sales taxes are actually more stable than income taxes. As I pointed out above, there is real-world data that does not support that "common sense" assumption.
7:30 p.m.
Dec 20, '07
Tom,
You might be right.....large coprorations may not be paying their share. But the fact there is one tax they pay that is as little as 10 bucks means nothing when you take into account all of the other taxes they pay and like I said before if a company makes enough money the fact they made a profit has nothing to do with the tax burden they pay....esepcaully if there is a pay roll.
Fred
Dec 20, '07
Chris, Thank you for your comment.
The main thing I would like to get across is that your very common sense statements like Your proposal to pair a possible sales tax with a more steeply progressive income tax is rather different than what someone else said upthread about accepting a sales tax only if it were paired with a comparable reduction in the income tax.
If we were to put expanded income tax exemptions at the lower end of the scale (Oregon taxes income, if not from the first dollar, remarkably far down) into your suggestion, that would help a bit too. For my money the effects would need to be felt far enough up the income scale to "hold harmless" the working poor and seriously mitigate the effects on lower-middle class incomes.
are exactly the sort of thing the debate should be about.
However, in past tax debates, there have been Democrats with the attitude, "What's the matter you idiot, don't you know sales taxes are regressive? " while others would quietly admit privately that some proposals are better for the lower end of the income structure than others.
An old friend of mine (former Dem. elected official -- when he a lot younger) was heard lamenting in the capitol one day in a small group conversation, "I could write a very intelligent sales tax proposal which wouldn't hurt people like us and low income people, but no one wants to listen".
Since I am no economist and just think it is time to have a plain language debate the ordinary store clerk, nurse, stay at home Mom, etc. could understand, what I am mostly is pro-debate.
Let's have someone with my friend's expertise and someone with Chris's viewpoint, and lots of other people say "this is my idea, and we should discuss how it would be written and how it would work" rather than just beating opponents about the head and shoulders verbally.
9:01 p.m.
Dec 20, '07
Darrel, just finished a 14-hour day traveling to Medford and back. Dont' have time to read through all of this tonight (I'm bleary-eyed), but actually, Governing did a report in '05, too. Dunno why '07 hasn't come out. Anyway, I'll try to do a little digging around ... tomorrow.
9:55 p.m.
Dec 20, '07
Jeff, the '05 Governing reports didn't focus on taxes like the '03 reports did.
http://www.governing.com/gpp/2005/or.htm
http://www.governing.com/gpp/2003/gp3or.htm
Do you really think I just made that statement up? No tax report since 2003.
10:05 p.m.
Dec 20, '07
BTW, Jeff, check in over at Patrick's place. That whole thing about making sales taxes progressive? That statement is now inoperative. Or rather, you can make a tax system with a sales tax progressive by, say, yanking up the rates on income taxes, but it doesn't make the sales tax itself progressive.
Oh, and there's a little problem with the whole "sales taxes are more stable than income taxes" concept. It's called reality.
Dec 20, '07
It is certainly possible to develop a progressive sales tax.
Rule #1: Exempt "inferior goods" and nessecities.
Definition: An inferior good is a good that has the property that when a person's income rises the demand for the inferior good falls.
Now, even with rule #1, poor people will wind up paying some sales tax. Thus, we adopt rule #2.
Rule #2: You issue a refund check each year to poor people to compensate them for the projected amount of sales tax someone pays at their income level.
I would support a progressive sales tax, but the following drawbacks need to be weighed against its benefits.
1) Transaction costs of collecting a sales tax. 2) Oregonians would get a worse deal from the Federal government. IRS tax code allows you to deduct either Income tax or sales tax on your federal return, but not both. 3) Tourist spending would decrease at least some if we had a sales tax.
Concern #2 would be addressed if a sales tax / VAT could be generate enough revenue to replace our income tax. That would really kick ass because we would be taxing consumption, rather than work! We would also be encouraging saving and investment over spending.
However, I would also kick in a very small asset tax to make it even more progressive. Proposal 0.5% tax on assets of $1M - $1B.
Also, I think federal tax code needs reform (e.g., either no state taxes should be deductible on federal return, or all state taxes should be!).
10:34 p.m.
Dec 20, '07
LT, if someone could give some solid numbers on a sales tax proposal that wasn't regressive and could give some rationale as to why it was necessary, who wouldn't look at it?
But the sales tax proposals I've seen over the years are basically the same mixture of half-baked "common sense" economic philosophy that Scott Bruun had in his Oregonian op-ed, and I don't understand why anyone here would fall for it.
Bruun believes Oregon has the "nation's worst tax structure" and that it was "crippling". Now, Governing magazine said in 2003 that revenue was inadequate, but the fairness and management of the tax system got high marks.
Bruun makes the assertion that sales taxes are less volatile than income taxes, something I was able to find real-world evidence against in a few minutes of looking.
There's the argument about how a sales tax is paid by "choice". And, of course, the canard that tourists and junkies will bring in huge amounts of revenue.
Except, of course, that the people paying most of the sales taxes are going to be Oregonians. Even most of the tourists paying sales taxes are going to be Oregonians, since we are half our own tourist trade. As for the underground economy, the only time it would be taxed is for sales of non-exempt items at legitimate businesses, and that money enters the aboveground economy as business income, which is taxed.
I think the reason nobody wants to listen, LT, is that the same song keeps getting played over and over, just with someone new on the pipes. Every sales tax proponent comes to the dance with what they think is a new tune, but it's just the same old song: same tune, same lyrics, same chorus. They tend to think that they've thought it all up themselves from scratch, but they've been using the same exact arguments for at least twenty years now.
Add sales tax. Third leg stable. Cut income tax. Cut property tax. Cut capital gains.
But what if the data shows that the sales tax isn't regressive and stable but simply regressive? What's it's purpose then?
10:56 p.m.
Dec 20, '07
I'm with darrelplant here. Once you exempt enough "essentials" to satisfy your conscience that you aren't preying unfairly on lower income people, you have created a tax base that is every bit as volatile as what we have now, and STILL a lot more regressive.
NO NO NO NO NO.
11:45 p.m.
Dec 20, '07
Oh, and the really fun part about the sales tax in, say, Washington? It varies from place to place. The base rate is 6.5%, but local additions to the sales tax range from 0.5% to 2.4%. They even provide you with a helpful online calculator!
http://gis.dor.wa.gov/content/findtaxesandrates/salesandusetaxrates/lookupataxrate/
No calculator for California:
http://www.boe.ca.gov/sutax/pam71.htm
I'd guess that it'll be a snap for everyone to predict the effects of that system.
10:18 a.m.
Dec 21, '07
Do you really think I just made that statement up? No tax report since 2003.
Darrel, the difficulty in discussing policy with you is that you always assume the worse and counterpunch based on your faulty assumption. As I mentioned last night, I was bleary-eyed and hadn't had a chance to read the thousands of words on the thread (made worse by the Typepad debacle) and digest them. I thought you just missed the '05 report--the Governing website doesn't make it easy to find that.
Darrel, I did just check Patrick's blog, where there is a series of new posts. I'll repeat a comment I made there for the sake of saving myself some effort. It regards your "inoperative" comment on the poetential progressivity of a sales tax. You misrepresnt his view--he says explicity: "But to say it is not possible to have a progressive tax system that includes a sales tax is wrong."
I added:
Darrel, you point is that in no case would a sales tax add stability to funding streams, and it would almost certainly add regressivity. You add, unneccessarily, that I am a pawn for ideologues who pine for a sales tax. We'll leave that aside for now, but it's flatly wrong--I have invariably argued against a sales tax until seeing these posts.
To your argument, though, I see no evidence of a theoretical barrier. Patrick offers a progressive structure in two or three comments that would create progressivity. Your dispute is with the practical applicability of the system
However, it's important to note that in a 2003 report by the legislature--I haven't done the research on more recent data--when they looked at all taxes and fees paid by taxpayers, Oregon had an almost perfectly flat tax structure. As I recall, everyone paid about 10%, give or take a percentage.
Since increasing progressivity and reducing instability are the goals, we must consider the current system a failure in both metrics. Yet Patrick's policy fix "might mitigate the downturn in government revenue during an extended downturn in the economy" and would improve progressivity.
What alternative structure would you offer?
10:20 a.m.
Dec 21, '07
Sorry about all the "Darrel's" in the above post--I am not obsessing here.
Dec 21, '07
As a small business operator, the last thing I want is more accounting to keep track of. Sales tax requires a lot of new accounting and reporting.
State income tax reporting requires little beyond that required for federal reporting [thank goodness]. Let's keep it simple.
Do away with the corporate kicker.
If more revenue is needed, add a higher income tax bracket. This would increase progressivity as well.
Simple, straightforward, responsible, politically possible - all things that Bruun's sales tax proposal are not!
10:45 a.m.
Dec 21, '07
Jeff, where, exactly, did I ever say you were a "pawn for ideologues who pine for a sales tax"? Coming just after you accuse me of "assuming the worse", that's rather a stretch, don't you think?
And no, your contention and Patrick's contention (and Kari's one of the the last times this was brought up here) was not that a "tax system" that included a sales tax could be made progressive. You originally said "sales taxes don't have to be regressive". That's simply not true. Now both you and Patrick are sliding away from that statement by claiming you meant something else.
Of course you can make a system including a regressive tax progressive, but the only way to do so is to modify other portions of the tax system so that they have a much steeper income ramp than they do currently. With rebates, you're still talking about taking $1,000 or more out of the hands of low-income earners during the year until they get their rebate check.
As for your invariable argument against a sales tax, I guess that's what you meant when you wrote a year and a half ago in a discussion with the same title as this post:
10:56 a.m.
Dec 21, '07
Damn you--you're not supposed to actually QUOTE me. That's really poor form. Good thing I'm not a politician. And, based on your last comment, we are perhaps in substantial agreement. Whether you characterize me as "sliding away" from my earlier claims or not, I didn't ever mean to suggest that we'd go for a sales tax in a vacuum. I always meant that it looked like it could be made a part of a progressive revenue stream. And I actually assumed that's what Patrick meant, as well.
Incidentally, in response to his poll (a sales tax yes or no poll), on Wednesday, I wrote: "I would really like a third category: wholesale reform that creates stable, progressive revenue streams but does not depend on a sales tax. That's my preference."
So you see, I am consistently inconsistent. Another reason to avoid office.
Dec 21, '07
We've all obviously been lulled to sleep if the hint of yet another tax doesn't outrage every one of us. While corporations continue to receive their "welfare" benefits, while real welfare benefits for those people in need are cut (in need because wages have stagnated, housing and health care have become outrageously expensive, good jobs gone while low paying/no benefit service jobs have skyrocketed thanks to the walmarts of the world--such stores at this point needed because of the growing number of people living in poverty)...
But hell, rather than talk about this truth, let's keep our heads in the sand and present the idea of yet another tax.
11:07 a.m.
Dec 21, '07
Sorry, I meant to include that as a direct link to the comment:
http://www.blueoregon.com/2006/04/time_for_a_sale.html#c16107572
Jeff, Patrick hasn't proposed anything in particular, apart from a sales tax with mitigations for regressivity. He hasn't done any calculations about how the mitigations themselves (such as ramping up the income tax rate progression) would themselves affect volatility. And you're still clinging to the notion that a sales tax would provide stability.
Not to mention which, the legislators behind the sales tax proposals are usually coupling it with reductions in the property tax, which happens to be the one of the most stable revenue streams.
11:37 a.m.
Dec 21, '07
And you're still clinging to the notion that a sales tax would provide stability.
I'm still agnostic. What Patrick says, again it "might mitigate the downturn in government revenue during an extended downturn in the economy." Quit worrying about characterizing my postion--I'm happy to do that myself.
11:57 a.m.
Dec 21, '07
"Might mitigate the downturn in government revenue during an extended downturn in the economy" is a long way from "the best part is that sales tax revenues are much more stable than income taxes" which was Patrick's original assertion that you quoted at the top.
He's already had to concede that "sales tax revenue is not significantly less volatile than income taxes in the short run and may, in fact, be more volatile".
The whole "sales taxes are a stable source of income" is slipping away like a house on a sandspit in a Pacific storm. When the primary argument in favor of a sales tax is that it's more predictable than the income tax, and data shows that on the timescale of the Legislature writing budgets that it's less predictable, maybe it's time to stop searching for justifications for the sales tax and see if your assumptions are actually based on sound foundations.
Or run for the hills.
Dec 21, '07
Tom Civiletti:
Capitalism does not require redistribution of wealth just because I believe so. I'm sure you are you capable of generating a reading list on the topic for yourself. You won't find my name on it, most likely.
Bob T:
Do you really call giving Bush millions for a baseball stadium an example of the kind of redistribution of wealth you seek? Or zillions of pork barrel projects? There are two kinds of regulations. The type that deals with actual safety is just fine so long as it's not overused by busybodies, but the type that is defended just because it has the word "regulation" is the one that has nothing at all to do with saftey or even rights violations and is all about the State choosing winners and losers. When the State gets to pick winners, the potential winners have an incentive to get their way while the rest of us have such a small stake in this that we don't bother keeping an eye on it.
Tom Civiletti:
And I am amazed at how much free market atheists are willing to accept on faith in direct contradiction to the facts. I guess you practice faith-based atheism.
Bob T:
I practice no such thing. What facts are you talking about, by the way? Here's one: Ma Bell maintained its monopoly due to government regulation, not unchecked free markets. You probably think otherwise. The facts are not to your liking.
Wanna talk about "regulation" myths? Like meat packing regulations and railroads? Ask away.
Tom Civiletti:
Milton Friedman's major contribution to the world was obliterating memory of Adam Smith's warnings about capitalism's shortcomings.
Bob T:
Balderdash. He needs to convince me of things just like everyone else does. And I don't like him just because he was raised and went to high school in the town I was born in.
Bob Tiernan
1:25 p.m.
Dec 21, '07
Why?
We pay the same price at the pump and we throw thousands of blue collar wage earners out of work. Want to pump your own gas, then move to Washington or California.
1:39 p.m.
Dec 21, '07
Fred, nobody in this thread but you claimed Nike only paid $10. PGE (owned by Enron) paid only $10 in corporate taxes since the revenues and profits were shifted on the books to Texas under its parent company in order to shield paying hundreds of millions in taxes it would otherwise be on the hook for if it was not able to juggle the book via its out-of-state parent corporation. And no, PGE could not move out of state if we force it to pay the taxes it smuggled to Texas and thereby avoid paying.
Dec 21, '07
PanchoPdx:
Perhaps a sales tax proposal would pass if it also allowed self-serve gas stations.
lestatdelc:
Why?
We pay the same price at the pump and we throw thousands of blue collar wage earners out of work.
Bob T:
Please, someone start a self-serve gas discussion.
Until then, the defense of keeping the ban, as written above, is weak. Very weak. Might as well get rid of self-serve salad bars and bring back extra waiters. Oh sorry - waitpersons!
Bob T
2:26 p.m.
Dec 21, '07
Oh, please, not again. The last time gas was still just over $2/gallon.
Dec 21, '07
Hello everyone. Thought I would chime in with a couple of observations.
When I wrote my original post about sales taxes, I based it on my understanding of sales v. income tax research from my time as a policy student, particularly my belief that sales tax revenues are much more stable than income taxes. Turns out that there has been a flood of new research in the intervening 15 years trying to understand exactly this aspect, and the picture that has emerged is much more nuanced. The old logic is based on estimates of the long term trends in tax revenue responses to income fluctuations, and indeed there, sales taxes are much more ‘stable.’ But this is argued to be largely an artifact of the fact that as gross income receipts rise over time, income taxes rise faster than sales. I buy that partially, but the reverse is then also true: that if gross income receipts experience an extended downturn, or even an extended slowdown, sales taxes will not fall, or slow down, nearly as far or as fast as income. In the short term, the story is a bit different. (For short term think about a two-quarter recession v. a two year downturn for the long run as a ball park). Testing for short run volatility in the data really means testing for variation around the trend (rather than the trend itself). It turns out that in the short-run, sales taxes are not much less volatile than income taxes and in some states more so. On average, across all US states (that have such taxes) sales tax volatility is lower than income only slightly but is slightly slower to adjust back to normal (this last bit is consistent with the overall long run trend being less sensitive). So in the long run, the stability story is correct in general but in the short run it is not. Many tax economists argue that most business cycles are short run in nature and so that is where the real issue lies. Again, I am not completely convinced – Oregon budgetary decisions are made biennially. So what I think is that sales taxes can add some stability, but not enough to justify them on those grounds only. And I also concede that sales taxes are not as stable as I thought when I wrote the original post. But I do still think that they would add long-term budgetary stability. They are, however, sadly not an alternative to a rainy day fund.
The second bit of information that is very clear from the literature (both then and now) is that in-general sales taxes themselves, even with lots of exemptions, are regressive. So any sales tax would have to be coupled with some sort of income tax credit or with a graduated income tax system to keep the overall tax system non-regressive. But it is not hard to avoid regressivity in the sense that calculating the appropriate credits is a reasonably straightforward exercise.
My intent all along (and still is) is to explore tax reform in Oregon, and specifically the possibility of a sales tax, and see what the received economic literature tells us. I am not a public economist so I don’t know the answers already, but I am a trained economist and can interpret the literature for a more general audience. This is what I have already started doing and intend to keep doing in the next few weeks and I intend to remain completely objective - I don't have a particular fetish for sales taxes, in fact, all else equal, I enjoy the simplicity of the current system. I hope to inform anyone who wishes to be so informed what economics says about all this, so you all can make an informed decision for yourself should anything come from this task force.
4:43 p.m.
Dec 21, '07
I'm not an economist, nor have I ever taken a class in economics, but I have slept in a Holiday Inn.
Nonetheless, I can research and read, and most importantly -- despite having done my English Literature thesis on Shakespeare's Henry V and a numerical analysis of the population of Elizabethan London -- I can add, multiply, and divide. Plus, I have a very good memory for what people have said and where those quotes can be found.
4:51 p.m.
Dec 21, '07
Plus, I have a very good memory for what people have said and where those quotes can be found.
Duly noted!
Dec 21, '07
Posted by: lestatdelc | Dec 21, 2007 1:25:33 PM
Thanks. Lots of people don't realize that the year self-serve gas got a hearing in committee, it was a committee with several women who'd had the experience in driving across other states.
The issue is not about "letting" people pump their own gas. It is about stations where one has to put a credit card into a machine by the gas pumps which may or may not work, about pumps which might malfunction, about parents with kids in the car having to perhaps take their kids into the storefront to pay for the gas, about people who are not in perfect health (old, disabled vets, not a lot of hand strength) having to deal with pumping gas themselves because they don't have a lot of choice in the matter---if they are lucky there might be someplace which will pump gas for them for maybe a premium of 10 cents per gallon, but what are the odds of that? Not to mention people worried about pumping gas while wearing their good clothes. When there were self-serve bills in the legislature, they were simple one line bills which didn't answer these questions, and the idea that a gas station would need to have 2 people on duty at all times (one to collect money, one to assist at the pumps if needed) was treated as subversive.
Not only would lots of people be thrown out of work, but in California there was a sign on a gas station we used when we were down there which said something like "due to the court decision won by Paralyzed Veterans of America, someone will be available to pump gas for any disabled person". Are the advocates of self-serve gas so young and healthy they can't imagine a time when pumping gas would be difficult for them?
No one is forced to live in Oregon--if they are so gung ho about pumping their own gas they can live elsewhere. In my neighborhood there is an Arco station where one has to go inside to pay, but also a station where they emphasize customer service: will not only pump gas but wash windows, check oil and tires if asked. Now THAT is the kind of choice we need!
5:21 p.m.
Dec 21, '07
Jay's Garage at the corner of SE 7th and Morrison always washes your windows.
In the spring of 2006, the Democratic governor of NJ suggested that the state go self-serve.
So whoever wants to stick their tongue on the third rail, feel free.
Dec 21, '07
Patrick Emerson wrote:
"So any sales tax would have to be coupled with some sort of income tax credit or with a graduated income tax system to keep the overall tax system non-regressive. But it is not hard to avoid regressivity in the sense that calculating the appropriate credits is a reasonably straightforward exercise."
This is true in theory, but difficult in political practice. Wealthy interests influence legislatures to make incremental changes that, over time, erode tuning of the system designed to maintain progressivity.
Patrick Emerson wrote:
"And I also concede that sales taxes are not as stable as I thought when I wrote the original post. But I do still think that they would add long-term budgetary stability."
Of course, the sales tax in most states in quite regressive. If a Oregon sales tax were designed to be less regressive [in itself, as opposed to balanced by increasing progressivity of the income tax], I believe its stability would be reduced. This is because the items that one would exempt to decrease regressivity are the items that have inelastic demand - food, medicine, basic clothing, utilities, basic services. So, a fairer sales tax would be a less stable sales tax.
6:33 p.m.
Dec 21, '07
Didn't know you were the thread monitor.
Nothing weak about it at all. It is a provable fact that Oregon's at the pump rate is basically rate at the national average and that if we went to self-serve there are thousands of people out of a job, with zero improvement in the purchasing of gas and as noted by others, a major inconvenience to people with disabilities.
As for your ludicrous comparison to salad bars, it is, like most of your nonsense, comparing apples to anvils.
6:36 p.m.
Dec 21, '07
lestatdelc,
Does PGE pay millions in taxes both federal and state and otherwise.....Yes. Should they pay more? Should they pay all of the taxes they collect? Totally different discussuion.
I am not the one that ever claimed all Nike or PGE paid was $10 or $20 bucks a year. A couple others posted that fact and left out the big picture in doing so.
Fred
3:24 a.m.
Dec 22, '07
What is fact, is that PGE paid only $10 in Oregon corporate taxes. PGE/Enron paying Federal taxes is irrelevant to the discussion of Oregon state tax revenue. Your argument is like saying because someone pays for their car's DEQ sticker, and property tax but only paid $10 in state income tax because they are driving through a loophole, means that pointing out they are doing so (i.e. only paying $10 in state income tax) is inaccurate. It IS accurate Fred.
You and I agree that in more than a few cases there are corporations in this state that should be paying more. I think it wholly appropriate to point out one place where corporations take in billions of dollars in revenue and because of the current corporate rate formula (and some loophole driving by outfits like Enron) only pay the corporate min. of $10 is a good place to examine restructuring the corporate rate, yes?
Dec 23, '07
Oregon doesn't need a sales tax. We need to size down the number of employees in state government and more effectively manage the dollars that are coming into the state already.
Dec 24, '07
Bob T wrote:
"Do you really call giving Bush millions for a baseball stadium an example of the kind of redistribution of wealth you seek? Or zillions of pork barrel projects?"
No, the kind of redistribution of wealth I seek is use of the progressive income tax to fund a single payer healthcare system and high quality public education, or a negative income tax for low-income workers.
Dec 26, '07
Tom Civiletti:
Bob T wrote:
"Do you really call giving Bush millions for a baseball stadium an example of the kind of redistribution of wealth you seek? Or zillions of pork barrel projects?"
No, the kind of redistribution of wealth I seek is use of the progressive income tax to fund a single payer healthcare system and high quality public education, or a negative income tax for low-income workers.
Bob T:
It would really help to cut spending in a lot of other areas first (yes, including the military which, by the way, is hardly the only place to find waste).
Are ya with me?
Bob Tiernan
Dec 27, '07
Bob,
I'm all for cutting wasteful spending, but then, we were discussing the Oregon state tax system before you mentioned George Bush's stadium [Texas?] and zillions in porkbarrel spending [feds?].
Dec 27, '07
Bob, unless one advocates Mike Huckabee's Fair Tax national sales tax proposal, this topic is not about federal spending.
That said, a friend once won some kind of award while in the military for saving the government money. It was something very specific like finding something which normally would be scrapped could be turned into something useful/ saleable.
My problem with most "we must cut government waste" rhetoric is that it is not usually that specific.
Dec 31, '07
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