Summary: Critics call the Legislature’s $800 million boost in taxes Oregon’s largest ever, but others say that, put in context, it’s not Opponents of the Legislature’s $800 million budget-balancing plan call it the “biggest tax increase in Oregon history” in speeches and interviews and on Internet sites.
It’s a catchy, galvanizing characterization. Whether it’s completely accurate depends on how the tax plan and state finances are viewed.
In raw dollar amounts, said state Legislative Revenue Officer Paul Warner, the latest tax increase clearly is bigger than any other. But that’s not the only way to look at it, he said.
The last time Oregon lawmakers bumped income tax rates was 20 years ago. The 1982 Legislature approved a temporary increase that raised about $79 million a year for three years.
But at the time, the state’s two-year general fund budget totaled $2.9 billion, compared with $11 billion for 2003-05. And the total income for Oregonians stood at $29.6 billion, compared with $100.4 billion in 2002.
“In percentage terms, I do think the increases in the early 1980s relative to the overall economy were larger,” Warner said.
“The economy has more than doubled in size,” in two decades, he said, so it makes sense that a tax increase will provide higher- than-ever revenues.
Oregon Republican Party Chairman Kevin Mannix regularly uses the “biggest” description when he talks about the latest tax increase. He said he didn’t consider how it compares on a percentage basis.
“This is the world of political dialogue,” said Mannix, who is pushing for a statewide vote that could overturn the Legislature’s tax package. “In terms of real dollars, it’s the largest tax increase in Oregon history. This is a simple way of defining a massive tax increase.”
Another way of defining it is to consider people’s ability to pay, say supporters of the legislative budget, which depends on the tax package to balance out. The current tax increase, as a percent of total income, is about 35 percent less than the one in 1982.
Not only that, said Sen. Kurt Schrader, D-Canby, but federal income tax cuts will more than offset any increases in the state tax. Schrader, a key architect of the new state budget, said the overall impact on taxpayers is negligible compared with past increases.
The Legislature set the tax increase at a level that will pay for what lawmakers considered to be the minimum level of services residents demand, including full school years, nursing care for the elderly and five-day-a-week courts. He said the average increase for single taxpayers will be $88.
“The question you ask yourself is, ‘Am I willing to pay 88 bucks a year?’ ” Schrader said. “If you’re a greedy, self-interested individual, you say ‘no.’ If you’re an Oregonian, you say ‘Yeah, I’m willing to pay 88 bucks a year out of a tax break I don’t even have yet.’ To me, it’s real simple.”
Schrader also said the income tax increase pales in comparison with the $2.4 billion in extra bridge and highway construction spending the Legislature approved. That was achieved by raising vehicle registration and title fees, and using the anticipated revenue to pay off bonds over time.
But for others, such arguments are rationalizations for what they see as an unwanted, unwarranted tax increase.
Citizens for a Sound Economy, a Washington, D.C.-based group that is spearheading the referendum drive, calls the increase “Oregon’s largest tax increase in history” on a Web site. Russ Walker, the Northwest director of the group, said that’s based on the dollar amount it raises, including the additional $400 million it would raise for the 2005-07 biennium.
“You have to look at the tax increase in its entirety,” Walker said. He said he won’t be drawn into an argument over semantics.
“Regardless if it’s the biggest, the second-biggest or the third- biggest, it’s way too big,” he said.
Harry Esteve: 503-221-8226; firstname.lastname@example.org
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Caption: MANNIX Way of defining “massive” rise SCHRADER Federal cuts will offset tax