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Bruuns plan puts burden on middle, low-income earners

(Soapboxes are guest opinions from our readers, and anyone is welcome to write one. John Kovash is a resident of West Linn and a retired investment officer.)

Conservative Republican Rep. Scott Bruun has a plan to restructure Oregon's tax code ('Change tax structure to end Oregon's economic mediocrity,' The Times, Dec. 13).

The plan goes basically like this: Reduce personal income and capital gains taxes by 50 percent and impose a 4 or 5 percent consumption tax on everything except food, medicine and medical services. He calls the plan 'revenue neutral,' but for most of us it would be anything but neutral.

Income and capitol-gains taxes are called progressive taxes because the liability to pay them rises with income. On the other hand, a consumption tax is a regressive tax because it falls most heavily on those with the lowest incomes. It is therefore no surprise that the big winners in the Bruun plan would be the wealthy for whom a 50 percent reduction in their income tax would be a large number. For those whose earnings trend more toward the minimum wage, a 50 percent reduction in income tax would be insignificant to nonexistent. Taxes on capitol gains are progressive taxes and are paid overwhelmingly by the wealthy, so a 50 percent reduction would be another windfall for the rich.

To offset tax relief for the wealthy, Bruun's plan would impose a consumption tax, which is a regressive tax and one that hits the working class the hardest. In other words, Bruun would shift Oregon's tax burden from the rich to the rest of us.

Bruun's plan has been standard conservative policy for decades, and he maintains that the changes in the tax code that he recommends would improve the economy. But consumer spending is 70 percent of the economy, and to take dollars out of the paychecks of workers who spend virtually all of their income is not only economic folly but would further exacerbate the dismal fact that hourly wages, adjusted for inflation, have fallen over the past 30 years.

It is the rich who have gotten increasingly wealthy from conservative fiscal policy, and the lower and middle class have found it more and more difficult to acquire assets or to afford a college education as their income has fallen.

How bad has it gotten? The richest 1 percent now take 21 percent of the total income of the country, while the bottom half get a measly 13 percent. This is the worst disparity in income since the Great Depression. It is no surprise then that the wealthy have acquired even more assets while the poor have found it increasingly difficult to save. As a result, 80 percent of the nation's private assets are now owned by just 10 percent of the people.

While Bruun's plan would make life more difficult for most Oregonians, he is right about the need to revamp Oregon's tax structure. But the tax structure we need would have corporations and the rich paying a fair share while enhancing the ability of working Oregonians to increase their standard of living, acquire assets and send their children to college.