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Tuesday, January 27, 2004

Math check

The Oregonian's editorial page today exhorts Multnomah County voters to vote for Measure 30, the state income tax surcharge. Perhaps the strongest argument that the editorial musters for a yes vote in these parts is its spin on the new county income tax: "County voters can't forget the original purpose of their local tax: to be a temporary lifeboat until state funding came through. The goal was never to secede financially from the rest of the state. The goal was to meet local needs until the state pulled itself together."

A few paragraphs later, however, The O makes this naked assertion: "With expected refunds if Measure 30 passes, about two-thirds of county taxpayers would pay lower taxes if the state plan passes."

I have to challenge that last statement. First of all, there's no guarantee whatsoever what (if anything) the county will refund if the state surcharge passes. But more importantly, even if the county pays refunds at the highest level estimated so far – by County Chair Linn – county residents as a group will pay more tax.

Linn says she'll refund "up to" 22 percent of the county tax; the tax is 1.25 percent of income. That amounts to a maximum refund of 0.275 percent of income. For most taxpayers, the proposed state surcharge is somewhere between 0.3 percent and 0.8 percent of income, depending on how high one's income is. Thus, it's a mathematical fact that the Measure 30 tax will cost Multnomah taxpayers as a group much more than they're going to get back, even if Linn's wildest dreams come true.

Assume that the total taxable income of all taxpayers in Multnomah County is $1 billion. I have no idea what it is – I'm just making that number up, but the actual amount doesn't matter for these purposes. Here's where the tax chips of Measure 30 would fall:

Total taxable income in county = $1,000,000,000
County tax at 1.25% = $12,500,000
Refund of 22% of county tax (maximum) if Measure 30 passes = $2,750,000

State income tax increase at 0.5% of income = $5,000,000

If The Oregonian is going to make a wild claim, such as that two thirds of county voters will save taxes under Measure 30, it ought to at least have the guts to back its assertions up with the numbers. Maybe I'm missing something, but I'd be shocked if the two thirds figure is anywhere near accurate.

UPDATE, 1/28, 7:53 p.m.: The same figure, which apparently comes from some Multnomah County official or another, is repeated in today's Willamette Week. Guess the local press is going to accept this rash prediction uncritically. Why not? It supports their editorial position.

It didn't even dawn on the county until recently that state and federal retirees won't be paying the county's new tax. There's a $1 million blunder. And The O and WW believe the bureaucrats when they say we'll actually pay less if we vote to pay more? That's Portland journalism for you.

Comments (9)

wow...i think i fell asleep reading that despite the informational value...

It is deadly dull, which is just what the politicians want. But when you write that check to Multnomah County for the new local income tax in April -- I don't think you'll find that dull at all.


So, you are advocating a no vote?

The Federal government has been almost completely de-funded (save for the defense industry and other corporate welfare)and we should start closing down our local government services as well?

I can't tell if you are just ragging on sloppy journalism, or if you are advocating a slash and burn strategy for our local funding?

I'm voting yes but I fully expect this sucker to lose. Then it will finally be slash and burn time. Give the voters what they want!!! (That means you Jack!)

Never try to pull one over on a tax prof. I just wish the voters understood how to break it down for themselves. We just need everyone in Oregon to start reading your blog!

I just wish the voters understood how to break it down for themselves.

Careful, that could easily be interpreted to mean that you don't think voters are smart. That would be a dangerous assumption to make, not to mention incorrect. And a lot of people won't agree with your position even if they understand and acknowledge the factual situation.

I saw that editorial, and I scoffed heartily at the claim that the county would eventually eliminate the local income tax. Yeah, and pigs might fly out of my ass too. They'll do away with the local income tax when hell freezes over. I'm voting no on Measure 30 and I sure hope it goes down to crushing defeat.

WWeek claims that the county tax is flat, while the state (Measure 30) tax is highly progressive. The result is that passage of Measure 30 coupled with partial refund of the county tax will result in (1) high-income taxpayers paying more, and (2) low-income taxpayers paying less.

Since there are more low-income taxpayers than high-income taxpayers, it is possible that 2/3 of voters will have a tax reduction, while at the same time the total amount of money collected will be higher. The 1/3 of high-income folks will pay more than the 2/3 of low-income folks will get refunded.

I'm not saying this is reality; I'm just saying it's one way the math can work without the big O being morons.

I see the progressivity point, but the two-thirds figure still seems like hogwash. It makes no sense that the state surcharge will amount to less than 0.275 percent for two thirds of taxpayers in the county. And the 22 percent refund nonpromise was couched in terms of only 9 percent the first year, which makes the math even worse for taxpayers.

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