Steve, I read the same or similar response to Jeff Alworth's post about sales tax about a year ago. However, if the sales tax were to exempt essential items that the "poor" need - then the only items that would apply are those that the "rich" would be buying anyway. And, admittedly maybe too simplistic, I also think that the higher priced the item, the more tax that gets paid, and those higher priced items are purchased by the rich.

Isn't it about spending power really? The more spending power you have the more you buy, the more you're taxed. The less spending power, the less you buy that's not essential, therefore the less you're taxed.

Am I oversimplifying this?

Terry, you're spot-on. This can be (and actually is) politically viable if we marry this concept to decreases in property and income taxes. There are good ways to do this that create more revenue... and most importantly, more STABLE revenue.

Additionally, with the exemptions that you're thinking about (plus the decreases in the income tax), studies have shown that poor people will indeed pay less in taxes.

But be prepared for plenty of flak about regressivity. See, the problem that some people have with that plan is that the non-tax-cheating rich ALSO get a tax break. And there's a lot of anger about "Well, how come the RICH get MORE of a tax break?"

But you've got it right in my opinion.

lestatdelc - Pardon me for not completely understanding your regressive / progressive comparison. However, I think Paddy brings up an excellent point that I had not considered, nor did you answer. Our income tax is not progressive. We're all basically taxed at 9%.

So let's remove those people that are below the income tax level and consider the rest of us. Those that make $40,000 per year have only so much to buy non essential items with, such as cars, furniture, clothing, etc. Let's call that amount $5,000 per year for "extra" items. For simple math purposes, if we had a 1% sales tax, that person or family would only spend an extra $50 per year. For someone that makes $150,000 per year, raise their "extra" spending to $50,000. That person now spends an extra $500 per year on sales tax.

Agreed that's not progressive by definition, however, how is that damaging?

I think you'd find more support for a sales tax of any kind if we first got rid of the ridiculously low corporate minimum tax in this state. It's hard to convince people to pay 3% or whatever amount more on even non-necessities if they know the corporation down the street pays only $10 per year.

Also, many of us have had bad experiences with "the sales tax that never stopped growing" in other states. Once a state gets a taste for a sales tax, they go up on a regular basis and soon you're paying 9%+ sales tax. It also more easily opens the door for Counties and Cities to enact their own sales taxes on top of the state sales tax.

I served on the Oregon House of Representatives Revenue Committee from the '95 to the '99 session. I introduced an initiative that would dedicate a sales tax for school funding. (it was introduced late and held up on title challenges. Oh well) I am a native born Oregonian and this is what I have done.

A joke we heard often in the halls of the State Capital: In Oregon, you are born and the doctor slaps your butt and immediately whispers in you ear: No Sales Tax. Its like the no self-serve in the gas station. Its in part an Oregon thing. Recycle your glass bottles and never ever vote for a sales tax.

Its also, I think, comes with the territory of being about the third most popular retirement destination (what I was told in the early '90s) behind Florida & Arizona. Folks on a fixed income don't vote for sales taxes. Its one of the reasons they came here.

It is, even after you exempt things like drugs, food, clothing, a regressive tax. Joe Poor and Mary Rich go to the store and buy a $10 widget. The sales tax is 10% - $1. That $1 is also 1% of the $100 in Joe Poor's wallet and 0.1% of the $1000 in Mary Rich's wallet. Joe is paying a higher percentage of the money available to him then Mary is in the tax - thus the regressivity of the tax. (also Joe is paying a higher % of the money available to him on the item itself but we don't get into fights over that too much)

However - regressive as a sales tax may be - it is 1/3 of a serious, revenue generating tax system. We started out with just a Property Tax way way back in the day. Under normal circumstances, the property tax is a stable, slow growth indicator of net worth. Income tax was added (and removed and added again several times) early in the 1900's. It reacts more quickly to turns in the economy, along with the sales tax.

Oregon chose to limit its property tax base and rate of growth which traditionally had been used for city, county, regional and school government. Limiting the property tax threw the school funding into the general fund - which at this point in time is pretty much solely funded on income tax - which we can see is a rather volatile form of revenue.

The last time a sales tax vote (also dedicated to schools!) went to the ballot it was 1993 and it was defeated 721,930 to 240,991. It may have been too early - the property tax limitation had just been passed and its effects wasn't yet obvious to most people. But It was the 7th or 9th such effort in the previous century and that vote was considered to be the latest nail in the coffin.

I personally think Oregonians would do well to reconsider some of the limitations we've placed on the property tax. Not only did we lose local control over what services we wanted to provide or not provide in our individual communities, we also are shifting the burden from one house/business to another depending on when homes are bought and sold. It is well on its way to being a deeply regressive tax, IMHO.

I also think that, (and my birth certificate not withstanding), yes its time to think about that third leg of a healthy, minimalist burden tax system is a small, carefully limited sales tax.

For what its worth. I will always wish my daughters and their peers could have had the same kind of public education I was able to enjoy growing up in the 60's and 70's.

Paddy I didn't mean to exclude cars and furniture. I consider those extras.

I even went so far in my mind to allow the first $5,000 of a car purchase to go exempt. Or allow an income tax credit for anyone under $40,000 for the sales tax amount of a car purchase.

I'm really undereducated compared to some of you out here. My intent was to really educate myself and understand any details.

Good discussion. I think that exemptions are a dicey area - we exempt clothes becasue they are essential, but what about designer outfits? And cars are an essential for many low income people to get to work, but if we exempt those is it fair that someone can by an expensive Mercedes tax free? Ultimately, in states that have sales taxes regardless of exemptions, the tax system is more regressive because lower income people spend a larger percentage of their money whereas higher income folks are able to save.

One person stated that the sales tax would be more stable. This is not necessarily true. In the 2002 recession it was, but in the current recession sales tax dependent states are getting hammered because consumer spending is way down (see California).

The legislature's task force on revenue restructuring acknowledged that the only stable tax is the property tax, but that is very unpopular. They recommended reforming the kicker by diverting some of the money into a rainy day fund during expansions that would pay out during recessions, smoothing out Oregon's revenue substantially. Then tax rates could be adjusted to provide whatever is deemed to be the appropriate amount of revenue. Check out their final report at http://www.leg.state.or.us/comm/lro/task_force_exhibits.htm

Any reason to believe that an ballot initiative to institute a sales tax would pass this time, when it hasn't passed on the last nine attempts?

No, I didn't think so, either.

Why not a sales tax? Okay, it might work, if what you're trying to do is make income and expense balance. How about instead, "why not cut spending"? I may have missed it, but did anyone on this series of comments bring this up even as a possibility, or even a partial solution to the budget shortfall? Is there nothing we can eliminate, or delay until another, better economic climate?

Here's another idea: reform the property tax system... I could never figure out why my house, valued about $400K (inside PDX limits, mind you) is taxed at close to $5K per year while I can point (due to research on the matter) to houses in the Laurelhurst area which sold for close to $700K in just the past few months and have property taxes for the current year less than $4K. Does that seem like an equitable tax system? Should the folks in Laurelhurst pony up their share, or am I overtaxed?

Recently on the Oregon Economics Blog, Fred Thompson urges us to think in terms of spending stability rather than revenue stability. A sales tax will not do much in terms of revenue stability, I think we need to focus on a permanent rainy day fund system as a first priority.

Good lord, the property-tax inequity is all about that damn Sizemore measure that We The People passed in the 90s. No mystery here.

"Any reason to believe that an ballot initiative to institute a sales tax would pass this time, when it hasn't passed on the last nine attempts?"

Only because if that were a valid argument, Oregon would not have eventually passed women's sufferage.

Not to mention that it's always been an addition of a sales tax without any accompanying tax cuts.

(FYI, it's prudent to await a response before saying "I didn't think so")

Oregon has one of the highest income tax rates in the nation, yet we still have budget problems.

Terry, in case you hadn't noticed, states with sales taxes are having budget problems too. As Brian points out, California is probably in the worst shape of all the states. New York and New Jersey are competing for second worst. Their sales taxes don't prevent that.

Sales taxes are not a stable source of funding either. Wherever sales taxes are imposed, automobile sales are the single largest contributor to sales tax revenues. As car sales tank, as they are doing now, sales tax revenue tanks as well. So tying sales tax revenue to school funding, or anything else, will not produce stable funding for the targeted spending.

The false belief is that adding a sales tax in Oregon now would produce windfall revenues which would make Oregon perpetually solvent. The experience in other states is to the contrary. Any new revenue produced will be committed to new spending as soon as the revenue comes in. When the next general economic downturn occurs, both the old and new spending programs will suffer.

There is an old saying about learning to live with what you got. Sales tax advocates refuse to learn.

Here's another thought, and feel encouraged to correct me if I'm wrong about the main premise for this idea, which is that income reductions for tax purposes are 100% for contributions to arts organizations just as they are "charitable" organizations. So: does this seem right? Before you jump on me, be aware I moved to Sirius radio only to have EVEN MORE choices for listening to classical music... but as much as I love the arts, and feel they bring enrichment to our lives, I can't look anyone in the eye and tell them Bach brings as much value to the world as putting bread into the mouth of a starving child, or funding a shelter for battered women... do we really want to value a contribution to the symphony the same as a contribution to Loaves and Fishes? And what if we eliminated, or even "halved" the value of contributions to "non charitable" non-profits insofar as tax deductions go... would their patrons abandon them? No - likely they'd pay the higher ticket prices which would result. And maybe, to keep their taxes down, they'd switch thier contribution to a "true" charitable organization... which would help the common good...

The state is generating all the revenue it needs, if someone in Salem would just bother collecting it:

Study says Oregonians fail to pay 18.5 percent of taxes every year

SALEM — Nearly $1.3 billion in taxes aren't paid each year in Oregon, according to a study by state officials.

Read the article here

Aren't we $800M short? $1.3B NOT collected. Anyone see where I am going here?

Terry,

You're new in town, right?

Was the sales tax more stable? Wasn't there something ugly going on with California's finances around 2002-2003 that led to someone with a lot of consonants in their last name replacing a guy who was recalled?

I believe that "something ugly" was Enron and other deregulated energy marketers manipulating energy prices. Not so much to do with sales taxes.

Hartlimes - not sure what you mean or the relevance of your question. If you mean new to Oregon, then no. I've called Oregon home for almost 30 years.

YouKnowWho stated it best: control spending

In Oregon as well as in DC, we show our ignorance and unwillingness to debate intelligently when we misuse the term "budget cuts". Whenever a particular sector complains that their budget has been cut, closer inspection usually means less money is being allocated than expected, even though there may be an increase from previous year funding.

As the other posters note, having a sales tax won't solve the problem - other states with all 3 legs have budget problems - partly due to revenue shortfall, partly due to budget increases expanding faster than revenues.

Another commenter noted that they would like their children to have the same opportunity at education as they had in the 50's or 60's. Why have education expenses grown faster than the economy has?

What has happened is that everything in now more expensive, and households have even more options to spend their hard earned dollars. What was considered a luxury in the past, is now assumed to be an essential expenditure. We simply want and consume too much, and are not willing to consider the consequences.

Years ago, it took a certain percentage of total income in the state to run things. The percentage required today is much larger - partly due to increased costs, but more to do with the government paying for many more services than it did decades ago.

So, since we never are going to resolve the "best" way to harvest tax revenue from the citizenry, there needs to be an effort to go back to the basics of budgeting, perhaps a ZBB, where the budget is rebuilt each year or biennium, rather than simply developing a budget by using a percentage multiplier over the previous year.

The legislature is slowly revealing the consequences of this year's tax revenue shortfall. Serious belt tightening is warranted, jsut as all of us have had to do in our own households.

And to the other commenter, regarding uncollected taxes. . . why are some citizens not paying? Are the examples coming from DC a clear demonstration that they are not being paid because they don't have to?

Every penny matters when you're poor. And I can tell you my older sister, who was on welfare, routinely had to put back food items to cover sales tax on needed items like toiletries, toilet paper, cleaning supplies, clothes, school supplies, and shoes.

Exactly why we exempt essential items. Granted, clothes would not be considered exempt, but assuming that a "poor family" only spends $500 - $1,000 per year on clothes, even at a 5-7% sales tax, that's an extra $25-$70 per year.

I am not trying to sound insensitive at all. I do understand that can make a difference in some peoples budgets, but I think that $500 per year on clothing is a lot more than a family that's considered poor would spend.

I'd argue that if a family can spend more than $1,000 per year on clothes, they probably aren't poor.

Jenni - fair enough. I see your point that there are some families that $20 per year could make a difference. However, would the benefit of increased revenue for the state, allowing more benefits for that family in need, offset the $20?

I would only support a sales tax if it included major changes to the income and property tax laws. On the income tax side, I would favor a progressive flat tax with no deductions, lowered rates, and all income treated equally. On the property tax side, we have far too much property that isn't taxed at all or receives very generous treatment. These properties need to come back on the rolls.

I'm a big advocate of tax fairness. Adding a sales tax on top of a grossly unfair income and property tax structure is just not gonna fly with me.

I have to agree with Steve M's basic premise. How depressing. It really is a regressive tax. It's worse, too, imo, that it isn't totally regressive, but hangs around the point that people will just tolerate.

Income taxes are the only truly progressive tax. If you want a regressive tax, I say scrap income and sales tax and go with a poll tax. Well, not literally, as you wouldn't collect half your revenues, but a per head tax. That's regressive. This half measure stuff is irritating.

Terry, $1,000 per year on clothes for a family of how many? That's only $83 per month. If you are including socks and underwear (which are less likely to be purchased second hand, I assume), then a family of 4 or 5 could easily go past that.
As someone who works in a semi-casual office setting, I would find it tough to keep within the $1,000 per year budget just for myself, and I am quite thrifty when it comes to clothes. I am not that into fashion at all, but it is important to be well kept and professional at work at most jobs. Very tough to do on $1,000/ year. Really. What about shoes? My kids sometimes grow through 3 sizes within one school year... I'm not trying to rant, but I really don't think that your assumption about spending $1,000/ yr on clothing is reasonable at all or very well thought out...

Posted by: Terry O | Feb 3, 2009 3:51:23 PM I'd argue that if a family can spend more than $1,000 per year on clothes, they probably aren't poor.

Really? That's only $83/month. When you factor in shoes (my kids sometimes change shoe sizes two or 3 times during the school year), socks, underwear, and the basics to keep a person warm, that's not much.

The assumption that someone spending $1,000 per year on clothes not being poor, is not very well considered, I think.

Even without kids, just someone making $11/hour or so in an office environment would need to spend at least that to stay well kept and professional in appearance (which could be important to moving up, or even keeping your job)

This is really a bad figure to start with. Not realistic AT ALL.

Only Wyden's Fair Flat Tax makes any sense among the flat tax proposals. Some proponents don't even want to discuss details like whether there is withholding of income tax.

Why are we taxing unemployment benefits?

How much of the Tax Expenditure Report is really valid in a time of budget crunch? Which would create more outcry--debating a well worked out proposal which includes a sales tax, or demanding that every tax credit in the Tax Expenditure Report be sunsetted and have to prove its worth to a skeptical public to continue?

Some things should be taxed very highly--salaries of pro sports players, management salaries at "nonprofit" organizations like Goodwill where managers make over $200,000, school administrators who earn over $100,000 AND have a car allowance, etc.

If there were a proposal to tax some income highly, soften the property tax blow for folks of modest incomes who have lived in their homes for a long time (as opposed to speculators), and contained a sales tax, I would support it.

But as the saying goes, the devil is in the details.

People who want sales taxes should move to a state that has one.

Good God! Terry O managed to make me miss the Sam Adams posts.

a name mentioned by Al Giordano is Dr. Jeanne Lambrew who was tapped to be deputy health care czar. She helped create the CHIP program in the Clinton Administration.

"Why not an Oregon sales tax?"

Pretty simple, politicians in the state are tone deaf. If they drop the income tax without any chance of it coming back, then we could have a sales tax. I think WA does OK with just two taxes.

However, the pitch is always we'll lower your income tax and promise not to raise it if you let us have a sales tax. No one is stupid enough to believe politicians to that extent.

You may not like it, but instead of arguing about how fair a sales tax is, you might have better results convincing tax payers that our elected officials are good stewards of our money.

The sense is, that even if Oregon had more revenue, they'd blow it. Ted K and the Legislature had a huge surplus 2 years ago they could have put totally in the Rainy Day fund, but instead decided to fund non-vital things instead. Don't get me started on how they wasted the Tobacco Settlement by just throwing it all into the general fund instead of using it to help people who smoke.

We already have a sales tax on gasoline, tobacco, liquor, rental cars, lodging, and gas/electric/cable utilities.

I don't believe the problem is inadequate tax revenue. The problem is inadequate political will to prioritize spending and recognize that even the State of Oregon can do more with less during a recession.

Oregon voters will NEVER support a sales tax without a corresponding decline in the income tax. And the legislators aren't interested in a zero sum compromise.

Not to mention the powerful retail and restaurant lobby: this is the third rail of Oregon Politics. Fuggehdaboutit.

I would support a sales tax if it were coupled with legalizing gay marriage. Gays from California would come her to get married and then have honeymoons and the state would get a cut of all that spending. Might even save the Columbia Gorge Hotel.

Would people prefer a fuel (gas) tax increase to a sales tax? Gas taxes are ridiculously easy to collect, some mechanism could be devised to offset the regressiveness, and it would capture underground economy (getaway cars need gas, too) and tax-free corporations, stem small biz tax evasion, involve tons less paperwork for everybody. Yes, we are trying to reduce our reliance on petroleum, but do you really see that as widespread in the near-term? BTW:We could control spending to some extent by cutting high school to a three-year program (I know, education association would scream, but does anyone think we couldn't compress the academic content?) Best feature: It is not (exactly) a sales tax. We would drive some fuel sales to border states, but if we just don't build anymore bridges, congestion in the Portland area would severely limit gas runs to Washington.

Thanks to everyone for their input. My purpose in asking the question was to educate myself from different perspectives. Aside from the emotional distaste for a sales tax, there are some valid reasons why one would work, and some valid reasons why they wouldn't. However, I think the overwhelming lesson I learned here is that there are several other options to consider first.

Corporate tax reform and Property tax exemption reviews are two of the big ones that would be a great start.

I am not sure how I feel about the answer of cutting spending. While I believe that there are probably some projects or some divisions that could cut spending, I find it hard to believe that we have enough gross overspending that would account for how much under spending we have on school funding, teacher salaries, road maintenance, department of corrections, parks, or any other grossly under funded issues Oregon has.

We are one of 50 states with a problem. Excuse me, make that 49 states with a problem because I heard on the news last year that Alaska is perfect. (Sorry, I couldn't resist.)

To those that believe $1,000 is unreasonable to clothe your kids or say I’m must not have kids, I have 3 kids so I do speak from experience. My two boys are older teenagers that are only 20 months apart and one daughter in elementary school. I did not spend $1,000 per year on school clothes and shoes combined when my boys were younger because I couldn’t afford to so I bargain shopped at discount stores and did just fine. Now that my daughter is elementary age and old enough to care about what she wears, it is a little harder, but honestly that's because I can afford to and CHOOSE to spend more money, not because I have to. Regardless, I still don't spend $500 on her for clothes and shoes. Do not misunderstand my point. I'm not saying people shouldn't spend that much. I'm saying that anyone of us that are referencing "poor families" that can't afford a sales tax do not spend that much on clothes to begin with and people that do spend that much choose to and are most likely not poor.

As far as "essentials" that I hadn't thought of, such as car parts, school clothes, job interview clothes, etc... Optimistically, I would hope that the state having extra funding for DHS to provide more benefits for these families would offset extra $200 they spend in sales tax annually. Maybe my optimism is naive.

The most important lesson I learned here is how little I know, which is a humbling lesson, but easy for me to accept. The number of perspectives on this subject, let alone any subject, reminds me that none of us have THE answer, but ALL of us, collectively, have good ideas that can become an answer.

Thanks again for all of the input.

I read through all the comments and I have not seen one mention of this:

A sales tax means I skip local retailers and buy things on the Internet.

Not having a sales tax helps local businesses. It also helps lure shoppers from Washington.

However, one thing that I have not also seen is that a sales tax earns revenue from tourists and those just passing through. In addition, sales tax helps get revenue from people who earn "under the table".

But I vote against a sales tax. Having lived in 5 other states that had sales tax ranging from 5 to 10 percent, I much prefer Oregon.

Now back to your regularly scheduled debate about regressive tax...

Jenni, "I lived in a sales tax state for 22 years. I saw what it does to low income families. Nothing like having to put food back so you can pay the sales tax on needed items."

This is the problem. Not all sales tax proposals are the same. There is no requirement that a sales tax cover food.

I went to college in a state which had a restaurant tax for dining in, so college students got take out food instead.

It is all about how the sales tax is constructed.

Democrats should know by now that HOW something is written and implemented is as important as the label on it.

Measure 5 was sold as property tax relief.

If grocery store food (incl. farmers markets), medicine, and services were excluded, in a balanced package which might include a restaurant tax, more income tax brackets (employer provided car allowance should be taxed at double ordinary income IMO) and tax relief of some sort, that should be discussed.

Someone should bring up the Barbara Roberts plan from when she was Gov. and Speaker Campbell got it killed on a party line vote. Why not debate that--I saw her in an Oregon Channel interview saying she still believes it is a good package.

No one will win me over by screaming SALES TAX IS BAD!

Show me an alternative proposal.

California's Property Tax "leg" was among the first to be limited in rate of growth. It is not a fully functional piece of a stable tax base. Which leaves income and sales tax. Cities and counties down here try to run on sales taxes which leads to several layers of sales taxes on stuff you buy. There is and has been for a while a real budgetary melt down in the California legislature which has led to all kinds of shell games where cities and counties don't actually get the benefit of the taxes collected in their region but find it has been grabbed by the Legislature. California is trying to run on sales & income taxes which are as volatile as the economy and its a big mess.

At the same time, California's state budget not unlike Oregon's state budget, has been increasingly locked up into dedicated pots of money due to citizen initiatives that mandate "tough on crime" which equals lots of money for prisons and the people who work there and not a lot left over for Higher Education or Safety Nets for our vulnerable populations. We're about to do another round of no money to run the state in a few weeks California Budget Negotiations

For those who write that there should be something that can be cut in the state budget (either one), I'd like to invite you to please research - for yourself - just what has already been going on for the nearly 15 years as the State of Oregon accommodates the shift of k-12 education while at the same time supporting the building and staff of major new prisons. Programs have been cut and cut and cut again. I'd like to hope your local elected official should be able to get you in touch with the information if its not on a blog/web site somewhere around here.

Darrel, don't take part of what I said and use it as an isolated statement. The rest of what I said was...

and some valid reasons why they wouldn't. However, I think the overwhelming lesson I learned here is that there are several other options to consider first.

If you read my original post, and again my recent thank you comment, I was asking a question to educate myself, and of course to open discussion. I did not enter this with any agenda other than to understand from people more educated than I am on the subject.

I have noticed that those opposed to a sales tax are more emotional about the subject, which was my point when I said emotional distaste.

Take a moment, Darrel, to recognize I am not attacking either side. I am understanding both sides. I gather from the dripping sarcasm and reference to Spock-like proponents, you have a very strong opinion on this subject. I don't have a problem with that, but don't criticize me for trying to understand both sides. I've acknowledged your perspective:

Corporate tax reform and Property tax exemption reviews are two of the big ones that would be a great start.

I'm all for a decent discussion or even a debate if I'm prepared, which I am not on this subject. But don't take my points out of context or twist them into something they aren't.

Why do you think a sales tax is good policy?

If administered correctly it could be a good policy. However, a sales tax is neither good or bad by itself. It's HOW the sales tax is written that makes the difference.

However, I will say that, from reading, the idea of another tax without first correcting larger problems with our current tax policies doesn't make sense.

Anitra, thank you for the perspective from someone that worked inside the system in Oregon and is now seeing a different perspective in California.

Once we enact a sales tax, it would encourage and entitle our leaders to put in more and more sales taxes to the point where it gets too confusing for consumers. In the province of Alberta, Canada's GST (goods and services tax) tells you that if you purchase just one can of soda, you pay a lot of tax on that item, yet if you purchaseda pack of 6 sodas, you pay less tax. While this seems logical to some, it is a discouragement to others. Some people don't want six sodas...they just want one, yet are getting punished for not buying in bulk or in quantity. Go figure.

This is the problem. Not all sales tax proposals are the same. There is no requirement that a sales tax cover food.

I never said it did. I said "sales tax on needed items." Those "needed items" could be a pair of shoes, a part for your car, toiletries, or whatever.

If you add much more to that list, it's going to be a luxury tax, not a sales tax.

Darrel - point taken about my comment of emotional distaste. Not that I can retract it now, but I will admit that it wasn't a fair comment. I'm not worried at all that I was put out here with a target on my back. I think the vast majority of readers here understand that my post, my comment, and other comments aren't personal. It's just a topical debate. I did get riles up when it seemed that you were taking my comments out of context, but it's a new day and I'm past that... No worries.

As far as valid reasons why a sales tax, I'll stick to my comment that a sales tax is neither good or bad. How it's administered determines it's usefulness. If administered correctly, certain exemptions would minimize the impact to low income families that can't afford it, and those that can afford non essential items would pay more just using the logic that they have more spending power.

We would also capture income from tourists. Although the tourist market decreases during an economic downturn, it is another revenue source, none the less.

I admit that I don't believe the argument that a sales tax would stabilize the state's revenue, because it's just as likely to be affected when the economy is down as any other tax.

Washington has successfully survived by using a sales tax, without an income tax. That's enough evidence in itself that a sales can work. However, like I said above, it hasn't exempted Washington from revenue problems.

I can say that I am now more educated for sure, and I now have an educated opinion rather than a water cooler opinion. I think there are better options before a sales tax would make sense.

Increase the corporate minimum. Kill the kickers. Un-flatten the personal income tax. Raise the gas tax.

I don't agree with raising the gas tax because that affects too many people with a broad stroke. Low income families pay just as much as high income. So I say cancel that idea.

I'm all for a more progressive income tax. How about a 1% increase on personal income tax for individuals with an AGI over $75k and couples over $120k? Then another 1% increase for $250k? I can say that without pointing a finger because I'd be paying an extra 1%.

I do think that corporate tax reform should come first, then corporate property tax reform, kill the kicker, and lastly consider a more progressive income tax.

what is going on with this thread? The number of comments keeps growing, but there not showing up here?

The question: "is there a valid economic reason to not implement a sales tax?"

The answer: No. In economic terms a sales tax is doable. In broader terms, there are many reasons not to impose an Oregon sales tax.

1. Administrative cost.
2. Net tax increase on taxpayers.
3. Not stable.
4. Weak coverage: Stocks, bonds, professional services, travel abroad, etc.
5. Loss of national options. Americans now have few choices of sales tax-free states.
6. Creates new problems: writing laws, legislative time demands, enforcement, updating, etc.
7. Added uncertainty. One more worry about future tax changes. One more obstacle to planning for the future
8. Hidden costs. Evasion, erosion of incentives to spend in Oregon, loss of tourism.
9. Added risk of "me too" local sales taxes.
10. Weakens economic incentives for state and local governments to economize and innovate efficiencies.
11. Unknowability. Who really knows what is a "basic need" for each individual and family situation? What about "non basic" needs that are deemed essential?

Why the extremity of message truncation?

One thing I haven't noticed in this discussion is the impact of a sales tax related to the tourism industry. One great source of revenue for the State (especially Oregon as a tourism destination) is other peoples money. I'm not a big fan of the sales tax having moved here from Idaho via Washington which both have some form of sales tax - but the extra dollars brought into the State by outsiders would certainly be significant.

"Years ago, it took a certain percentage of total income in the state to run things. The percentage required today is much larger - partly due to increased costs, but more to do with the government paying for many more services than it did decades ago."

One thing of note here - we can thank the devolution of the federal government under Reagan for this dandy. A lot of state services prior to 1980 were paid for (at least partially) with federal dollars. Reagan devolved the cost for many of those programs (which are still required) back to the States to be paid for solely by the states - leading to higher costs passed along directly to the state taxpayer (and spread over a smaller base I might add)....thus driving up the cost of government to everyone. Also - the explosion in prisons has been a huge driver of cost everywhere.

No Oregon sales tax...not now...not ever!

"One thing I haven't noticed in this discussion is the impact of a sales tax related to the tourism industry"

Years ago, when my family toured in Seattle, My sister (then only 6) had 'enough money' to pay for a sandwhich for her lunch...she was hungry. She saw what it costs and had the exacty amount. However, when it was rung up at the counter, she was told to produce some more pennies for the lunch. Because she didn;t have the extra money, the clerk told her 'too bad' and took the sandwich away, leaving my sister - a six year old, running and crying and still hungry. Thank you to the sales tax for this traumatising moment.

Oregon makes it a point that there is no sales tax in the state. That fact is even advertised in Western Canada (Alberta and British Columbia) on thier cable systems.

Oregon would stand to lose a lot by alienating those tourists.

Posted by: cw | Feb 5, 2009 10:39:22 AM

what is going on with this thread? The number of comments keeps growing, but there not showing up here?

I think a lot of the appearing/disappearing comment issue is pilot error, though understandable.

The scenario is that you are reading a comment on, say, comment page 2 of 3. You post a reply. You scroll to the bottom of the page and it isn't there. You can refresh the page, ad nauseam, and it never appears. Sometimes, you later notice it, much later in the thread.

What is happening is that you were on page two. The comment posted to page 3 or maybe a new page 4. You would have to go to the bottom of the page you're at, hit "more comments" however many times it takes to get to the end, and there will be your comment. Sounds obvious, but when you mentally are thinking of it as a single page, it can appear very screwy, particularly after hours.

"Increase the corporate minimum. Kill the kickers. Un-flatten the personal income tax. Raise the gas tax."

How about a personal minimum tax. I mean, we are ALL in this together, aren't we?

The sales tax is not regressive!!! I lived in Washington State most of my life and I had the lowest tax burden of any place I've lived. Why? Because with the sales tax you only tax disposable income which the poor have almost none of. I pay twice as much in Oregon income tax as I did sales tax in Washington State. The income tax system would work here if we adopted the federal levels of deductions and exemptions as Utah and Idaho have. I'm being killed by the income tax here and wish I were back in Washington State where they have the same attitude about the income tax as Oregon has about the sales tax. And I'm far from rich. I made less than 25,000 last year.

Sales taxes are proven regressive and very inefficient to operate. Progressives should be banding together to fight a sales tax, not considering ways to support it!

Don't get fooled into a sales tax! If they even claim it's "temporary"- it really won't be. Trust me because here in California we keep getting "temporary" tax increases in good times and in bad. It's all a scam to redistute wealth from those who work to those who don't want to. In Los Angeles, we are facing a new 10% sales tax rate! The budget problems are not caused by you not paying enough in taxes - it's the government has a spending problem. The legislatures have better benefits that you, they get per diem, they get expense accounts, cars and maintenance paid for, perks galore and a salary that can't be matched in the private sector. They are supposed to be public servants, but instead vote themselves pay increases like kings. You hold the purse strings - make them accountable and hold on to your hard earned money.