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My View: Let's fix out-of-whack property tax system

Oregon’s property tax system creates winners and losers, and most of us in East Portland are on the losing side (Inequities tax some Rose City neighbors, March 20).

Property taxes can be a considerable financial burden for homeowners but are necessary to fund the crucial services needed by our communities — public safety, schools, roads, libraries and more. The problem with Oregon’s tax system is that it is inherently unfair and creates a hidden subsidy for certain property owners while shifting the burden of paying for local services to others.

A recently released Northwest Economic Research Center report, prepared at the request of the League of Oregon Cities, “Oregon Property Tax Capitalization: Evidence from Portland,” highlights these arbitrary inequities and describes what a difference such flukes can make to home prices.

The report looks at the relationship between property taxes paid and the housing market, and comes to a disturbing conclusion: the system is not equitable, and some people pay less in taxes and then benefit from a higher selling price when they sell their homes.

I represent families living in East Portland, an area that happens to contain homes with some of the lowest average sale prices in the city. According to the NERC study, my constituents are on average paying taxes on 77 percent or more of their homes’ market value.

However, this is not true for other parts of Portland. Under Oregon’s tax system, taxes are largely based on a property’s market value in the mid-1990s. Since property values have grown unevenly since then,

inequities in property taxes have emerged, particularly

in parts of inner North, Northeast and Southeast Portland, where values have increased significantly.

In neighborhoods like Boise, Eliot, King, Humboldt, Sabin and Woodlawn, homeowners enjoy a considerable advantage — on average, residents in these neighborhoods pay taxes on only 19 to 43 percent of their homes’ value. According to the report, these homeowners enjoy the benefits of the system not once, but twice: they pay less in taxes, and they see that discount help grow the market value of their homes. In fact, property owners selling similar homes in different neighborhoods can attribute between $9,300 and $45,000 of potential sale price to the whimsies of Oregon’s property tax system, according to the report.

Meanwhile, East Portland neighborhoods have considerable but basic needs, such as funding for sidewalks, street repairs and other city services. The idea that we’re giving essentially a property tax break to a doctor living in North Portland and no relief to a working-class family in East Portland seems inherently unfair, but this is exactly what’s going on. The property tax relief our system provides is not targeted. It is arbitrary, imbalanced and unfair.

We need to take a hard look at our property tax system and start to right these inequities. Updating our system so that is more equitable for all Oregonians should be a priority for

us all.

Jessica Vega Pederson is a first-term state representative for House District 47, which encompasses much of East Portland between Interstate 205 and 162nd Avenue.