Oregon State and Local Taxes Hit Poor and Middle Class Harder Than Rich, Study Finds

The analysis comes as a task force created by the state legislature and appointed by the governor is reviewing Oregon's tax system.

(SILVERTON, Ore.) - Oregon state and local taxes take a bigger bite out of the pocketbooks of poor and middle-class families than those of wealthy families, according to a new analysis released today by the Oregon Center for Public Policy.

The figures were compiled for OCPP by the Washington, DC-based Institute on Taxation and Economic Policy. OCPP is presenting the information today to a state task force examining how to restructure Oregon's tax system.

"Oregon's tax system is upside down," said OCPP policy analyst Michael Leachman. "A tax system promotes opportunity when it is based on ability to pay. But in Oregon, those who can afford to pay more wind up paying the smallest share of their income."

Adding up all state and local taxes, Oregon's low-income families had an effective tax rate of 9.2 percent, compared to an effective rate of 7.8 percent paid by Oregon's wealthiest 1 percent of families.

The effective tax rate paid by Oregon's wealthiest families falls further, to 6.7 percent, when federal deductions for state income and property taxes are taken into account.

Though faring better than the poorest families, middle-income families in Oregon are also paying a larger share of their income than the wealthiest families. Families in the middle had an effective tax rate of 8.4 percent before federal tax offsets and 7.9 percent when factoring in the federal deductions.

According to Leachman, the bigger impact on poor and middle-class incomes is due to the income tax system going easy on the wealthy and to state and local property taxes and excise taxes, such as gasoline and cigarette taxes, eating up a larger share of the income of families in the middle and bottom than of those at the top.

Oregon's wealthy don't pay significantly more in income taxes because Oregon's income tax brackets and rates are flat compared to the federal system and the wealthy can fully use Oregon's subtraction for federal income taxes paid when calculating taxable income, said Leachman.

Even though the wealthy tend to own more valuable homes, the wealthiest 1 percent of Oregon families paid only 1.2 percent of their income in property taxes, compared to 2.6 percent for middle-income families and 4.6 percent for the poorest families.

The analysis comes as a task force created by the state legislature and appointed by the governor is reviewing Oregon's tax system. The Revenue Restructuring Task Force, which includes as one of its members OCPP executive director Chuck Sheketoff, is expected to issue its recommendations this November for the 2009 legislature.

Among the key changes recommended by OCPP is making our tax system more fair by expanding the Earned Income Credit, a tax credit that's targeted at boosting the income of low-income working families.

"The task force has a great opportunity to respond to the imbalance in our tax system and foster opportunity for low-income working Oregonians," said Sheketoff.

The Oregon Center for Public Policy is a non-partisan research institute that does in-depth research and analysis on budget, tax, and economic issues. The Center's goal is to improve decision making and generate more opportunities for all Oregonians.

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Mark April 29, 2008 9:54 am (Pacific time)

When most people set up their advertising programs it is developed for their specific market audience. What medium is the most effective is the one they use. When funds are short for their advertising budget they will generally stop using those advertisers that have minimum success. Marketing is both a science and an art, but profit is the guiding force that sets the methodology.

Someone who actually knows April 27, 2008 10:04 pm (Pacific time)

Samson: Historically, advertising always increases during hard economic times out of necessity. I am not sure where you get your statistics. It is interesting to suggest that educated people are the ones who don't understand and that is always the cry of oppressive regimes like the Fascists and the Nazi's and the Communists; to always bring the educated down first as they threaten the right wing causes of greed. Your politics are very sad.

Samson April 27, 2008 6:53 pm (Pacific time)

Henry my family has been in business in Oregon for over 120 years. We have had our ups and downs, but our collective experience , including hiring outside professionals, have allowed us to adapt and remain in business. I'm sure your experiece has helped those that hired you, but we have found that hiring people with actual business experience provided a better service for us. The OCPP provides many fresh ideas for debate and for that I am thankful, but so far most people/organizations in the business community prefer to deal with the type of professionals I mentioned above. As far as taxes, well the OCPP has their viewpoint and so far the state legislative and executive have theirs. The tax rates should be lowered in my opinion during these times, the recovery would happen quicker and would be more robust. Certainly the advertisers on this website would like to have more revenue during this time. If a prolonged recession takes place, advertising expenditures are usually the first to be pared down. The business world is not something you learn about by some professor drawing diagrams on the blackboard or applying economic models that have no real world application other than it sound good. People's jobs and their families welfare are on the line! Our business continues because we place high value on our employees, and their families. I have found over the years that professional business consultants are generally finacially well-heeled, the talkers are generally not.

Henry Ruark April 27, 2008 12:20 pm (Pacific time)

Samson et al: Yours plays once again that old business shibboleth: "I know better than anyone because I made a profit", with side/tune of "I"ll keep all I can get, too !" You fail to state what business, how large, how many employees, what products, how you prepared "academically" or "experience-only". As with Sandy, we thus have no record of responsibility or accountability except your own valuation of your status. You completely avoid key issue of productivity and who now shares in that progress, at what levels --which is key not only to tax fairness but also to desperate debacle we now face in the economy. You denigrate anyone in the management field except those in business; yet it is the direct responsibility of our business and financial sectors which have brought our economy now nearly to its knees. I.E., your response is not only parochial, but appears distorted if not purposely perverted for diversional propaganda points ,such as that "plumber-operation" irrelevancy. Re consultants, most get to BE ONE because of precisely the kinds of experience seen as demanded for problem and issue solution by those beset by more than they can handle on their own --and the added ability to write, advise, lead and otherwise earn their fees by sharing their special abilities with others on a learning-teaching basis --which is what consultancy nust create to be effective. Believe me you do not win and retain clients by anything but effective impact on the problem you help them face and defeat; and it is only on the basis of recommendation to others by successfully served clients that anyone ever gets to build further consulting. The absolute reality in our Oregon is plainly stated by Leachman in OCPP story; it is result of impartial study by impeccable authoritative non-partisan national source whose reputation and continued activity hang on accuracy and testable method open to probe by others. Yet you challenge their findings on simple, single one-shot/one-industry one-business experience, sure to be far more limited in any meaningful end-result, and as surely confined to your own interpretation for us here. For my dollar bet on Oregon future, I'll take the OCPP approach and determination of realities. Fact is fact and reality revolves --far too rapidly these days-- around that fact, too. Reality is that the rich have wangled special actions from legislators by heavy use of "campaign contributions" and dollar-driven other pressures via their business interests, with union-busting as major sideline action to do still further damage, all in pursuit of "profit uber alles" via corporate political control far beyond what is wise, safe and healthy for our democracy. The time has come when most in the lower layers, paying a disproportionate share of all income while the upper groups relish both more of productive effort and its rewards while luxuriating in tax-rate slash on top of tax-rate slash, for past decades. Thank you very much for your intrepid intervention here, even if perhaps unwise.

Samson April 27, 2008 8:49 am (Pacific time)

I have been retired for several years now, but several times over my working years I hired a number of consultants when our company needed some specialized direction. I simply cannot imagine any business who would hire someone with no practical business experience. There are many variables that come into play that can both help and hinder a business. The price of oil and the redirected primary (formerly) use of corn is having an extremely negative impact on our national economy. Now is not the time to increase taxes, in fact making permanent our current tax rate will allow CEO's/CFO's and other businesses to make plans that provide an improved financial forecast. The threat of tax increases simply makes a shaky economy less confident in their planning. I can appreciate anyone who has decades of experience in any field of endeavor, but would I hire a plumber to remove my appendix? Certainly not. The Oregon legislature has had many opprotunities to alter the corporate tax rate, and both major political party's have been in positions to change it, so it is not an ideological matter, but one that is a matter of business/economic pragmatism. Tax rates will always be controversial, and I am amazed at the number of people who comment on what's going on in the business world who have absolutely no professional management experience. Maybe that's why they have never gotten very much traction, but when they do, what a mess they make. The below data that states that the top 50% of income earners pay 97% of all taxes is pretty profound and demonstrates that tax rates are not unfair to the bottom 50%, in fact it is just the opposite. It's hard to run a business, and most will fail, and that failure rate will go higher if new taxes/fees are increased at this time.

Henry Clay Ruark April 26, 2008 8:42 pm (Pacific time)

To all: "See with own eyes" rather solid proof of Sandy-silliness re tax situation in his 4/25 and 4/26 Comments. Can you imagine a real large organization businessman writing such inanities and revealing such lack of both knowledge and experience as is found in those ? We may be dealing with a fraudulent-eer again here, so invitation to ID-self should clear matters rapidly...OR he could always do own Op Ed in full detail with "see with own eyes" links to prove himself. Early clue is insistence re questioning authoritative data from OCPP statement, with no more than irrelevant reference to national tax rates, then following with more-of-same.

Henry Clay Ruark April 26, 2008 8:31 pm (Pacific time)

WHY is it that ostensible "business leadership" always turns on complex organization claims and profit uber alles ? We know nothing of Sandy by his own choice, so the major points of both responsibility and accountability remain a mystery, open only to his unsupported say-so, lacking any documentation or even link or two to prove up his points from authoritative sources we might accept. Mine are on record right here for you. Such leadership claim always also denigrates academic and working experience other than their own definition; yet it is the academic fields for every profession which lead the way with research and full innovation making business success itself possible. I could cite long list of actual working experience and details, but will simply now challenge Sandy to ID self to Editor for some proof of all those large claims, and for direct contact to exchange any documentation needed --if he has any. Perhaps "success" requires something other than unproven words-here; so let's see who you are and what you have DONE other than talk, Sandy. Mine is on record in more than 5 million published words selected and approved by some 50 editors over 50 years, not to mention some 150 clients from broad range of needs and views paying for consultant assistance and --yes-- "informed opinion", too. I need no lessons from one who chooses to "remain anon" and has demonstrated some woeful cynicisms and striking lack of sensitivities, with nothing more to back it than keyboard exercise here.

Sandy April 26, 2008 6:24 pm (Pacific time)

Henry no doubt you have lived a long life that has included a wide assortment of experiences, but being a leader in a business that has a large staff coupled with all the other micro/macro expertise it takes to remain profitable is probably not an experience that you have had, right? The best business consultants I've come across were not MBA's or PHD's with nothing more than college classroom experience or say writing for some editorial page, but generally retired executives who came out of retirement who simply liked the action of maximizing a business's potential. It generally is some government mandated policy (usually a tax, a fee, or some other inane admin rule/regulation) that adversely impacts a business. In some cases people have to be let go, and of course the business might fail no matter how good the leadership may be. As you may know, approximately 95% of all new businesses fail, so what is the reason for this high failure rate? Generally not knowing one's business environment is the primary reason, and you, as a former consultant surely know that. Right? Currently the nations unemployment rate is pretty low compared to say around 1980, but the price of oil is the main culprit for our current downturn. I'm an optimistic person, so I have no doubt that our capitalistic market system will ride out this bad patch and we will come back even stronger. It is far better to look for solutions than just sit around on one's uninformed and inexperienced rearend and do the "Chicken Little." Right?

Henry Ruark April 26, 2008 2:32 pm (Pacific time)

Sandy et al: Your sensitive and cogent response appreciated. It allows me to point out that precisely what you mentioned happened in 600-layoff -- and thus clearly emphasize that tax policy is so entangled and involved with all business operations that it in effect shapes much of what happens with legislation, including personal-paid tax rates. When corporate business interests can buy heavily influential planning inputs for precise shaping of "the law" itself we are in real trouble. You are dead right most do NOT understand either business OR legislative-lobby/perverted policies, and that it takes personal experience to do so. Having been both lobbyist and consultant and also sometimes "reporter" in such situations, I do speak from that specially-experienced position, and thus not only deplore your stated attitudes as "misinformed" but do also understand from whence they cometh in large part, from long experience "in the media"with all its many failed opportunities to lead us all into much stronger personal understanding of such complex matters. It is the major role of the media to teach and lead in a democracy that has long been failing in our nation, now further driven by greedy owner not satisfied with many 20/30 percent returns, as in past decades. Re ref. to "rich Daddy", it is reflection of experience with most who display similar misunderstandings of realities involved. Time is now radically short on changing flow and feelings involved here --including the racial aspects mentioned in other story-comments-- if we are to avoid precisely the same destructive traps which history shows destroyed most previous attempts at a working and citizen-appreciated democracy, based on the broad personal understandings of such implicit in what our Founders built for us. I.E.,Pogo had it dead right: "We have met the enemy, and he is us !" (See previous Op Eds making this point in detail with much documentation and "see with own eyes" links.)

Anonymous April 26, 2008 11:05 am (Pacific time)

off course the illegals get it for free. we got to hit someone hard!

Sandy April 26, 2008 9:57 am (Pacific time)

I don't see what are tax policy had to do with these firings. Maybe there were some business situations that caused this, why would someone or some organization do this unless there was a financial situation that created the need to layoff or terminate, that's usually how it goes, right? You think the price of oil had something to do with this? How would increasing taxes have changed this? Recall years ago when they added tax rates to luxury boats and all those boat-building jobs were lost, until they stopped that tax? Please don't take this personally Henry, I just have found that many people simply do not understand how things work in the business world. Maybe this is the difference from having real-world experience in contrast to observing what they think is going on? I wish I would have had rich parents also. How do you think people like Ted Kennedy, Al Gore and GW Bush would have done had they had to do like most Americans?

Henry Ruark April 26, 2008 8:30 am (Pacific time)

To all: Mine-to-Sandy last perhaps colored by local top story in Eugene, Oregon: 600 Monaco Coach workers fired outright (300 here) due to sweeping economic debacle from eight years of neocon concentrated manipulations, highly favoring rich and corporate interests, driving down the market for leading brand of standard recreational vehicles. Does Sandy include those Americans (and millions of others so captured by events) in characterization of the many so impacted by life event with no possibility of their personal control ? For me, his descriptive denigration misses mark of the many I've known so impacted in four similar "depressive" situations since the '70s. Have "been there, done that" twice in my "checkered career" in two demanding professions for which I most carefully prepared (M.Ed., EdD-3yrs abd), for no help when the economy was similarly pilfered by Reagan-Bush I assault via same perverted "trickle down" "supply-side" greed-driven stupidities, with unavoidable similar impacts on my whole generation--with repeat-run during Bush II for last 8 yrs. Millions like me made it that far due only to NDEA-bill easing veteran professional education efforts. We had no rich Daddy to send us to a private prestigious college after similar private school-preparation provided by accident of birth into owning class. Doth this level and kind of person ever visit the reality we others all must face ? OR is this very-obvious (but also tragically misinformed) attitude the unavoidable cost of thirty years of disastrous denigration and damage to our democracy by those denying the inescapable realities ? In news, we speak of three classes of readers: Thinkers learning and growing; Casuals seeking "entertainment"; and then the WDS (Woefully Deprived) for whom there is apparently no remedy except brutal life-experience, even if "college-educated". (Apology to Sandy: Nothing personal, simply inevitable response to yours-as-example.)

Henry Ruark April 25, 2008 7:25 pm (Pacific time)

Comments from Sandy reveal attitude and mind/set making impossible any rational dialog dealing with complexities made clear in OCPP report. Realities for so many differ now so much and so drastically from his mental images that a million wiser words, even from someone he knows and respects as authority, will make no difference here. So will leave enlightenment for him to experience he may have later, when all things not really so rosy for him as is now obviously the case. Life teaches us all sooner or later; his lessons seem not to have arrived as yet. We can hope the safety net and societal care and concern are there, for him, when it may be desperately needed as for so many now caught in the economic slave-worker traps which have become the broad American experience.

Sandy April 25, 2008 3:01 pm (Pacific time)

I saw several sources that used the same numbers that I posted below. Why does injecting national numbers cause confusion? It's the feds that set our main tax rates, so they work hand in hand with the state. These rates have nothing to do with some manipulation of SS or Medicare, these are the tax rates and the breakdown percentages. My income has doubled in the last 8 months, and why should I be paying more taxes as a percentage of my income than someone who has not taken the time to train themselves to increase their income? You can take a lot of incentive away from people when you tax them unfairly. My desire is to increase my earnings as time goes by and I think most people can appreciate that. Those who just lay around, who have dropped out of school do that by choice, and the fact is that there are alot of lazy people out there who want something for nothing. Once again look at the tax schedule, when you earn more you pay more. Sure there are people who figure out how to game the system, but until the tax laws change I will do all I can to make as much money as I can, and feel good about it. I also pay a significant percentage of my income to various charities. My hope is the Oregon tax code, if and when changed, that we the public have a voice in the matter, rather than have it just forced on us.

Henry Clay Ruark April 25, 2008 11:58 am (Pacific time)

Sandy et al: Please note "national source" maningless here; you can find any numbers you seek if you know where to look. IF government/agency stats, that makes them even further distrusted; manipulation of SS and Medicare dollars prime example. Much more meaningful is what part of productivity gains now translated into income for the segments receiving it, which is also key to huge growing gap between rich and poor. ANY comparison must fully cover complex other factors, well stated for Oregon in the OCPP story. Fact remains that trend has been for decades to shift load from far-heavier rates paid by rich by moving tax-take to the far larger other classes with increase in their burden while relieving rich. Oregon picture-here clearly reflected in OCCP materials. Why not check OREGON numbers rather than inject complexity by use of national data, open to serious question and also demanding probing examination impossible in this limited space ? Could there be any possible connection with the "corporate campaign contributions" concept still shaping much in Oregon ? With ID to Editor for direct contact, happy to dialog deep and detailed with you on this from past experience and also "heavy" documentation. "See also" my previous Op Eds re real problem in corporate tax share in Oregon and national joke of "$10 corporate minimum tax" still shielding profit makers operating here --after SEVENTY YEARS !

Sandy April 25, 2008 9:37 am (Pacific time)

I am still researching the taxpayer breakdown for Oregon but the below poster appears to have the right percentages that I was able to verify on the national level. New government data show a growing income gap between rich and poor. But the rich are paying an even larger percentage of total taxes. The population of the United States passed 300 million in October. So how does your income stack up against the growing numbers of your fellow citizens? New statistics show that an income of $31,121 or more puts you in the top half of all income earnings. The top-earning 50% pays 97% of all federal income taxes. A much wider discrepancy shows itself -- in reverse -- when it comes to the portion of individual income taxes paid. That top 1% of earners pay 37% of all the federal individual income taxes collected. The bottom 50% of earners pay just 3% of those taxes. In 1986, the top 1% of earners reported 11% of all income and paid 26% of the income taxes; the lower-earning 50% made 17% of the income and paid 6% of the nation's individual income tax bill. So the trend shows that the rich are paying more as time goes by. Though who knows how many people like Wes Snipes are out there?

Henry Clay Ruark April 24, 2008 5:14 pm (Pacific time)

To all: OCPP's previous Oregon tax documentation available to any and all via website. Charlie IS in error and not only on point he mentions. He neglects, per neocon pattern, to point out progressive nature of longtime previous US tax pattern, now heavily reversed over past decade or so, and heavily favoring the top 1% or smaller group. For me OCPP report makes all too clear precisely the point Charlie sees fit to deny. If he has documentation for final claim, let him cite it for our "see with own eyes" check, per S-N pattern, and your own "use own mind" evaluation. While at it, why not check out facts reported on full Oregon tax debacle, available via OCPP documentation via Leachman testimony to legislature in last full session. Via request with ID to Editor, will send direct to anyone, with added information rescinding and responding to neocon false claims in depth and (very depressing !) detail for both national and Oregon realities. File covers some 20 years, so expect pages... So, Charlie, "put up or shut up" via your own documentation if any.

Henry Ruark April 24, 2008 2:38 pm (Pacific time)

To all: ANY possible reform of Oregon tax law which neglects to exact their fair share from any and all corporate entities based in Oregon is a farce. OCPP's own testimony to the Legislature shows definite and desperate avoidance of that fair share by far too many enterprises making the dollars in our state. Then there's that national joke, belittled in the comic strips, the "$10 minimum corporate tax". That's gotta go, after more than SEVENTY YEARS ALREADY !! So let's not just turn this reform back on its feet and right side up but make it a full, honest, open and completely responsible and accountable job. IF NOT, the voters will soon wise up even more and take still further and more potent and powerful action on those still in office-then, with rising economic pinch the sure motivator for massive action soon. Even the passed potent power of corporate "campaign contributions" cannot now be allowed to continue to shape such basic and demanded reform in this state.

Charlie April 24, 2008 2:13 pm (Pacific time)

I may be in error but does not the top 40% pay over 99% of all taxes? This is taxes, but sure we all get exposed to a wide assortment of user fees, but this article does not address how the taxes are broken down. You have literally millions who receive some type of tax refund on taxes they never paid.

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