One low tax rate for all will ease inequity
Oregon needs a new revenue code to ensure that our community will have a reliable source of income to meet its needs. The current economic situation has merely highlighted the flaws of our existing state tax code.
We have become a cartoon item in the national media with respect to our shortened and shortening school year. We have been forced to terminate an array of decent social programs for the most vulnerable of our citizens. We have terminated a significant portion of our state trooper cadre, released habitual criminals from our jails and thrown people with challenged physical and mental situations out of safe homes.
The economy appears destined to deteriorate further. And with the current revenue model, all public services inevitably will face various degrees of dismemberment. This, in the short term as well as long term, will lower Oregon's attractiveness to businesses, as well as to their prospective employees.
So what is the problem with our current Oregon revenue codes?
1. According to a report released in March by Tim Nesbitt of the Oregon AFL-CIO and Laurie Wimmer Whelan of the Oregon Education Association, 'There are 192 income tax expenditures, which will account for lost revenues of $7,366.6 million in 2003-05, or approximately 43 cents of every income tax dollar (based on March revenue forecast).' This reference is found on Page 14 of the report 'A Primer on Tax Breaks in Oregon, March 2003.'
In common sense language, this means that about half of the tax revenue mandated by the current tax code has been 'forgiven' to special parties.
2. According to a supplement printed with the April 2002 issue of 'Today's OEA,' Oregon's federal fund revenue comes from the following sources:
• Personal income tax Ñ 86.5 percent
• Other Ñ 7.3 percent
• Corporate income tax Ñ 6.2 percent
What this means is that under the current Oregon tax code, our business community pays only 6.2 percent of all the general fund revenue that the state collects.
• • •
It appears that legitimate revenue needs of the state are not being met equitably and fairly by all participants and beneficiaries of Oregon's community; it appears that the current revenue code has shifted more than 75 percent of its revenue needs onto the shoulders of individual taxpayers.
I stress the term 'appears' because the data are too complex for any one individual to analyze and verify. However, it is interesting that the Oregon revenue data shown are duplicated nationwide, according to an article in U.S. News & World Report published in August 2002. Under the heading 'Paying Uncle Sam,' it shows that, nationwide, corporations managed to lower their share of the nation's tax burden from 39.9 percent in 1950 to 13.2 percent in 2001, while individuals in the same period faced a burden that increased from 60.1 percent to 86.8 percent.
Thus, from my perspective, there is a complete loss of faith in the equitableness and fairness of both codes. With that background, I have no other choice but to suggest that our lawmakers go back to the principles of kindergarten, where the underlying precepts are simplicity and fair play.
Here is my suggestion for a new version of Oregon's Tax Revenue Code:
1. Oregon will have a flat-rate gross income tax on all income derived by individuals and entities operating in Oregon. There will be no exclusions, forgiveness or exemptions. Individuals, businesses and corporations will pay the same low rate.
2. Oregon will adopt a surcharge on all gross income to fund an escrow account whose income will provide for all of Oregon's basic public services at a level mandated by voters and the Legislature; when the endowment produces sufficient income to meet mandated services, the surcharge will cease until such a time as the majority of the Legislature determines that a need exists.
3. Oregon's Department of Revenue shall be mandated, under a public oversight panel, to set the tax rate every five years, with any surplus held as a savings account to be applied against unpredictable fluctuations in Oregon's economy. The state's operational savings escrow shall be equal to 25 percent of its budget.
Consider this: Would our lives as individuals, small businesspeople and corporations not be simpler and more productive if we knew that we all pay our fair share of our community's needs? I, for one, want to live in a state where we trust one another and, together, build healthy communities.
One low tax rate for all of Oregon: With the energy we save, we can go to work on the real issues.