You and Measure 59
Chuck Sheketoff
Are you one of the one out of four taxpayers (22 percent) who will get something from Measure 59? What will you get?
If you have income of at least $405,000, you are in the richest 1 percent of Oregon taxpayers and as a group you will average $15,000 in tax savings from Measure 59. You and the others in the top income class with incomes averaging $1 million will reap almost half (49 percent) of the tax savings created by Measure 59.
If, on the other hand, you are a middle-income taxpayer — with income in the $30,600 to $50,000 range (averaging $39,600) — as a group Measure 59 will give you $2 on average.
Middle-income taxpayers will get one-tenth of one percent of the savings.
Households with annual incomes exceeding $83,200 would receive 97 percent of the tax break, leaving just 3 percent of the break to be divided by those with incomes under $83,200.
Measure 59 would cut at least 9 percent of General Fund revenues each biennium.
That's equivalent to the total funding that Oregon’s public universities will receive from the state in the current biennium or to cutting the salaries of all Oregon K-12 public school teachers by 70 percent.
Want to know how it is a backhanded way of lowering tax rates for the wealthy?
Find out the answer, and more about Measure 59, by reading the latest report from the Oregon Center for Public Policy, No Gain, Just Pain (HTM of executive summary) or No Gain, Just Pain (PDF-full report).
Discuss.
Chuck Sheketoff is the executive director of the Oregon Center for Public Policy. You can sign up to receive email notification of OCPP materials at www.ocpp.org
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Aug 19, '08
"A backhanded way of lowering taxes for the wealthy."
More like an express recognition that 50% of taxpayers pay approx. 97% of total income taxes (with the top 1% paying nearly 40%(!) of the total).
The bottom 50% of taxpayers pay only 3% of total income taxes. THREE percent. Why should they get any more than 3% of the upside from M59?
Aug 19, '08
Yes, this measure proves that Sizemore is really a Calvinist. If you have wealth, you must be more virtuous, God must smile upon you, and you deserve lower taxes. If you're poor, you must be stupid, and thus you'll vote for this measure. It's a cynical attempt to package a regressive measure in attractive anti-tax sheep's clothing. I wish the State had made a criminal racketeering case against him when it had the chance.
12:40 a.m.
Aug 19, '08
Of course the fact that the higher incomes pay a larger chunk of the taxes can't have anything to do with the fact that they also make the majority of the money in this country. That upper 50% does include some of the world's richest people, you know. They make more an hour than those in the bottom 50% make in a year.
As a percentage of income, those at the lower income levels regularly pay the same - or more - than those at the higher levels.
You have to look at percent of income, as you're looking at some people who make $10,000 a year and some that make $10,000 a minute. Of course the person making less per year is going to pay less in dollars than the person making more.
Aug 19, '08
We're being asked to kill the goose that lays the golden eggs.
This shouldn't be about the wealthy versus the poor. Wealthy people have, in many cases, earned their money because of hard work and prudent decisions. I harbor no ill feelings toward the rich. (Particular rich people, perhaps, but not as a whole.) However, an educated workforce, good infrastructure, and a stable society are critical for wealth creation--the wealthy could not have prospered so much without them. For example, there would be no technical industry--no Intel, no Microsoft, no Google, no Amazon--without quality schools that could train the workers it needs. The same is true of other sectors of industry as well.
We ask wealthy people to pay more to keep society running because they have reaped the most benefit from it, have the highest stake in social stability, and can most afford to do so. To pass this tax cut would endanger our state's educational system, and therefore its economic competitiveness. All of us, rich and poor, would be poorer because of it.
Aug 19, '08
I Pay for Your Kids:
You are comparing apples to oranges. You refer to the top % of taxpayers. That is not the same thing as the top % of earners. For instance, I am definitely in the top 50% of earners at my company. However, I have a wife and 3 children (sweet, sweet deductions), so I'm definitely in the bottom 20% of taxpayers at my company.
Do you see the difference? Do you see why it's not suprising that the top 50% of taxpayers pay the most taxes?
Don't feel bad, though. Tax issues are pretty complicated. You're not the first person to get confused and lose his bearings.
Aug 19, '08
Gee Bert, you sound a little comfused yourself. As a tax professional I believe I have found the answer to the continuing qwest by some people to tax the rich and give it to the poor. Jealosly. Resentment. Etc.
Aug 19, '08
So, Larry, do you really think lower income earners should pay a HIGHER percentage of income in taxes? Really?
Aug 19, '08
Larry, you're argument is as clear as your grammar and spelling.
Aug 19, '08
Egads. I put chose the wrong "you're." I love irony, even at my own expense.
Aug 19, '08
I had no idea that so many Oregonians were living on such small incomes. No wonder so many people are anxious and easy prey for the smoke and mirrors offered by the anti-tax crowd.
Aug 19, '08
Chuck, why would anyone bother to hire you or your firm when you only have one viewpoint? Basically every one of your posts on this blog are about taxing the wealthy. You must be consumed with rage on the subject. Which I guess is okay, something happened in your life that left you unable to function normally. But why in the world would you bother to bore the rest of us with your constant fixation on the wealthy? And how could that be good for business? I know I'd never bother to hire your dumb ass for anything since I already know the stupid advice I would get from you. Tax the rich seems to be the only concept that fits in your head. Move to Cuba already. Your stupid tax the rich policy seems to be working just fine there. No money for anyone is the net result. Everyone is poor (except for the supreme leader of course).
4:23 p.m.
Aug 19, '08
Chuck Sheketoff may be a monomaniac, but he is often right, as he is in this case. Measure 59 would remove one of the main design features that makes Oregon's flat-rate personal income tax one of the more progressive state taxes in the US (i.e., limited deductibility of federal income tax payments helps explain why the folks who earn 2/3 of Oregon's person income pay 90 percent of its income taxes and 80 percent of the state's total tax take).
Aug 19, '08
By the way, I'll vote for measure 59. Seems like an obviously fair idea. I don't see any reason to pay taxes to Oregon on income that I didn't receive. The Oregon tax should be on the income left after taxes are paid to the Feds.
Aug 19, '08
That's nice, Bert. Now run along back to the kiddie table while the adults discuss big people matters.
Income share is not relevant to the M59 analysis. However, since you brought it up, I'll provide the data:
The top 50% of taxpayers pay approx. 97% of total income taxes [WHILE ACCOUNTING FOR 87.5% OF TOTAL REPORTED ADJUSTED GROSS INCOME]
The top 1% of taxpayers pay nearly 40%(!) of the total income taxes [WHILE ACCOUNTING FOR ONLY 22% OF TOTAL REPORTED ADJUSTED GROSS INCOME].
The bottom 50% of taxpayers pay only 3% of total income taxes [WHILE ACCOUNTING FOR 12.5% OF TOTAL REPORTED ADJUSTED GROSS INCOME]
Source: http://www.taxfoundation.org/files/ff135.pdf
My question remains: Why should the bottom 50% of taxpayers get any more than 3% of the upside from M59?
Aug 19, '08
I plan to vote no on most measures, and to ask all my friends to vote no on all reruns, all Sizemore measures, and all the other initiativemeister measures. Might vote yes on a couple, but only fresh ideas.
Aug 20, '08
IWPFBK:
You're either dishonest or easily duped. Adjusted gross income is, essentially, the amount of income a person is taxed on. With a graduated tax structure, of course people the number fall out as you say. The thing is, most people aren't taxed on their whole income -- and some people are taxed on very, very little of their income.
It's what you don't say that is telling. What do the numbers look like when you include FICA/Medicare taxes? What do the numbers look like if you include investment earnings as income? What do the numbers look like when you don't "adjust" the income?
Returning to my earlier example of pay at my company and my wife and 3 darling deductions: I pay my fair share of taxes if you look at adjusted gross income. It's the adjustments that lower my "income" so low that my taxes are lower than coworkers who earn less than I do.
Basically, you have a small number of very carefully chosen "facts" to support your, for lack of a better word, ideas. You make statements about "top taxpayers" and "adjusted gross income" that sound like they mean something other than what they mean. You do that because the real numbers (percentage of total income paid in total taxes) don't support your argument.
That's intellectually dishonest. I'd urge you to take a look at the whole picture, but I really don't believe you're interested in understanding. You've already made up your mind.
10:15 p.m.
Aug 20, '08
The reason 34 states plus the District of Columbia do not allow any subtraction for federal income taxes when calculating their own income taxes is that the subtraction undermines progressivity of graduated rates. Removing the cap as proposed by Measure 59 is truly a backhanded way of lowering tax rates for those with greatest ability to pay.
And, by the way, one of the statutory goals of our tax system is to have it based on ability to pay. It's not a new concept. Heck, Luke Ch. 21, written long ago, teaches that a few pennies from a poor woman's purse costs her more than many pieces of gold from a rich man's horde.
7:55 a.m.
Aug 22, '08
Chuck,
Coming late to this, but do you know where the $0 cut-off point is, i.e. below which income persons will get no benefits from this? If for the whole middle 20% average benefit is $2, it seems likely that the cutoff is above 50% and probably pretty well above.
If a majority of Oregonians will get no benefit from this measure that's a stark and clear message for use in opposing it.
Also I think that arguing it from the bottom up may be a more effective rhetorical strategy.
E.g. "More than 50% will get nothing and 80% of Oregonians will get less than $40, but will face the consequences of a 9% drop in revenues," then go into the consequences, with attention to things like how it would affect state support for small town schools & rural health care as well as more general consequences.
<h2>We need to dig into that chunk of voters who buy into the "big government Democrats are elitists" kind of argument but are going to get economically hammered, individually and in their communities, if this goes through.</h2>