My Thoughts on the New Tax Proposal

I'm not a big fan of the bipartison tax reform bill that the Oregonian discussed this morning.

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.

Oregon on the Road to Universal Health Care

An Oregon State Senate panel yesterday backed a proposal for Universal Health Care in which individuals and employers would contribute to a pool which all residents of Oregon would be granted access to. Private insurance companies would then compete for the ability to cover the people paid into the pool.

The commission's draft bill lacks crucial details, such as costs, but it does outline a broad proposal for dramatically changing how Oregonians would buy and receive health care.

"We are trying to do something that has not been done in this state or this country before," said Sen. Ben Westlund, an independent from Bend who co-chairs the Senate Interim Commission on Health Care Access and Affordability. "All eyes are once again on Oregon."

Commission leaders, who met Friday in Wilsonville, say the plan would give every Oregonian a health card that could be used to buy a complete health care package -- including dental, mental health and vision coverage -- for less than most businesses and individuals now pay.

In addition to the goal of expanding access, the plan includes features to control costs and improve quality. The same three goals for comprehensive reform are being pursued by the Oregon Health Policy Commission, the Oregon Business Council and former Gov. John Kitzhaber's Archimedes Movement.
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The Senate commission's plan would require all employers and individuals to contribute money to a common pool called the Oregon Health Care Trust Fund. Residents who earn less than 250 percent of the poverty level would not have to pay to be in the plan. The fund also would include public employee and federal Medicaid contributions.
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The plan would collect money, possibly a payroll tax, from businesses. Large companies with self-insurance plans would have their contributions reimbursed.

An 11-member Health Care Trust Fund Commission or board, appointed by the governor, would adopt regulations and administer the trust. Businesses and individuals could choose health plans, which would be paid through the trust with rates set by the trust commission.

The Senate group decided that the trust commission should function like a corporate board, with an executive director and staff. Much of the debate Friday was over who should be represented on the board.

The plan would cover all Oregonians, including the more than 600,000 who now lack health insurance. Individuals who choose not to participate in the plan would lose their personal state income tax deduction. All participants would be required to write an advance directive, describing the level of care they would want at the end of life.

The directive is one of many features in the plan designed to contain costs and improve quality. Insurers, for example, would compete for health-card holders. The state also would increase competition by requiring hospitals and doctors to reveal their charges and costs.

I'm still skeptical that universal health care can really succeed on a State level, but when the Federal Government fails to act, States like Oregon, Hawaii, Massachussetts, and Vermont have no choice but to act. I look forward to seeing how this works out if it passes, but this is definately a step in the right direction.