A bipartisan plan to remake Oregon's tax system -- add a 5 cent sales tax, cut income taxes by one-third, add tax credits for the poor, slash the tax on capital gains -- was formally put before the Legislature on Wednesday.
If enacted, it would represent the biggest change in state tax policy since 1929, when Oregon began a state income tax.
But the odds are steep: The plan would have to be approved by two-thirds of the House and Senate, and it would have to overcome the deep aversion of Oregon voters and politicians to a sales tax.
I guess I'm one of those with a deep aversion to a sales tax. Sales taxes are regressive, and the sponsors of the bill realized that. They were wise to attempt to balance it out for poor Oregonians by making income taxes for those very people lower.
Taxpayers in every income range could expect to pay less in taxes, except some taxpayers who earn too little to owe income taxes. For most Oregonians, sales tax payments would be more than offset by reductions in income and property taxes, Westlund says.
But Westlund acknowledges that some people will slip through the cracks in this bill paying more in sales taxes but not having enough income to get an income tax cut to balance it out. So the poorest Oregonians end up paying a disproportionate high percentage of their income to the sales tax. Aside from that practical argument, I think sales taxes are also a pain, in Oregon now when you see a price on something you know thats the price, something reassuring, when there's a sales tax you dont really know what you're paying in the end unless you're a math wizz. There is something that can be done to this bill that I believe would make it acceptable. Washington probably has the right model here, Washington has a sales tax but it exempts food, so that the basic necessities that everyone must have and cause the sales tax to burn the poor are not taxed. If the legislature wants to enact a sales tax they should exempt food so that the poorest Oregonians dont get burned as they would without such an exemption.