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Thursday, March 28, 2013

Hey, City Council! While you're tweaking...

An alert reader suggests that the absurd new Portland arts tax may be unconstitutional in more ways than one. Noting that the city's tax regulations treat "social security income (taxable or non-taxable)" as "income" for purposes of the city tax's low-income exemption, the reader writes:

I have not seen anyone suggest a basis for the arts tax to be imposed on Social Security income, given the following provision of Article IX of the Constitution of Oregon:

"Section 9. Taxation of certain benefits prohibited. Benefits payable under the federal old age and survivors insurance program or benefits under section 3(a), 4(a) or 4(f) of the federal Railroad Retirement Act of 1974, as amended, or their successors, shall not be considered income for the purposes of any tax levied by the state or by a local government in this state. Such benefits shall not be used in computing the tax liability of any person under any such tax. Nothing in this section is intended to affect any benefits to which the beneficiary would otherwise be entitled. This section applies to tax periods beginning on or after January 1, 1986." [Emphasis added.]

Has this issue been discussed anywhere?

Until now, not that we've seen. Someone who is being taxed solely by virtue of their receiving such benefits ought to protest. But that ain't us.

Comments (22)

I am also curious about if for some reason one source of income is prohibited from local taxation, how does the Arts tax ordinance "stack," if at all income types for arts taxation? If all income is the same, the first incidence after the thousand dollar threshold might also be considered un-taxable, because the first incidence of taxable income is a mix of both un-taxable and taxable incomes. (I guess there is a clause in the ordinance which says if one part is struck down the others remain. This would not be effective though if the tax is found to be a head tax.) Some have also argued the domicile language of the arts tax is unlawful.

And if the City is going to re-write the arts tax, at what point shouldn't it be resubmitted to voters since we are operating under the guise of a fair election involving the Arts tax. Of course, it was not a fair election at all as the City's surrogate charities (sporting six figure plus salaries for their administrators) were founded and funded by the City, and the ballot title came shaped by City Hall using the old saw of doing it for the children (when its mostly to fund PERS and high end arts for the well off). The Judge could not change the title very much because statutes allow a less than adequate depiction of the real impact of the measure.

Does the city have to put a new tax up for a vote? I didn't think so. It's usually done for political cover.

Of course they can just "tweak" the administrative rules again, and hope people don't notice and request a refund.

Just kill it already. Pretty please with sugar on top!

This is interesting. I collect SS and pay tax on part of it to the Feds; but I've never noticed an adjustment for Oregon income tax liability relating to that. Other differences in income calculations -- interest on treasurys for example -- are handled, as far as I know, through adjustments (plus or minus) to income as calculated for federal purposes.

I once made Bill McDonald Laugh.

"The group had not been able to engage the Somali community as much as it would have liked."
Those people know to steer clear of Pirates.
Posted by Tom | March 1, 2013 8:37 AM"

That's a finesse shot, Tom. You could have gotten in trouble in so many ways, but you drained it. Well played.
You know another group that's done a tremendous job discouraging pirates? Carnival Cruise.

Posted by Bill McDonald | March 1, 2013 8:42 AM

Form 40, line 14 and 17.

oops. I meant to post this in the thread about Dick Cavett. Sorry.

Classic CoP performance.

I have a friend who has only SS as income.

He and I are going to have a little talk.

his whole thing re he Arts Tax reminds me of variation on the title of an old Jimmy Breslin book, "The Gang Who Couldn't Tax Straight".

Too funny.

My tax preparer said today she had no idea if people will be able to deduct the $35 as tax paid on next year's form ... just one more twist on this mess.

Heh. He said "tweaking".

Form 40, line 14 and 17.

Thanks, TG. I shoulda looked first.

Al in SE: According to the Arts Tax FAQs by the City of Portland,"Taxpayers that itemize deductions on their federal income tax return will generally be able to deduct their Arts Tax payment on their 2013 Schedule A (as State and Local Income Taxes).

It will be difficult though, if the Arts Tax is determined not to be an income tax.


This fiasco is a brilliant piece of performance art with a cast of dozens. In that spirit, I'd like to see the five members of the City Council open the public meeting on the tax repeal with a 3-minute group twerking session. It'd be even more meaningful if Sam and Randy participated.

The only further participation I want Sam and Randy involved in is if they are in stocks in Pioneer square and the city is selling tomatoes to throw at them for the "arts".

That would create quite a scene/picture for artists to make paintings of
or photographs of, etc. to then sell. That could be quite a lucrative fundraiser!
How much would one pay to throw a tomato at them?

John commented about federal income ax deductability of the 2012 Arts Tax:

"It will be difficult though, if the Arts Tax is determined not to be an income tax."

If the Arts is not an income tax under Oregon Law, it can't be levied or collected by he City. Head axes are a "no-no". If is not an income tax under Oregon law you won' be paying it, so the question of deductabiliy under federal law probably never arises.

Good catch, Alert Reader and Jack.

The ordinance itself does not define "income earning." Thus, the term is defined by the administrative rules. These rules don't need a vote of Council. We saw this last week, when Jack's posts embarrassed staff into quietly removing gifts from the definition of income.

My guess is that we will see SS and RR retirement income silently slide out of the administrative rules. Thank goodness Jack caught it before we had to spend another $100,000 on oops-we-messed-up mailings.

Maybe, it's time the City Attorney had a look-see at what the Revenue Bureau is doing, just so they can say, "You can do that, that, and that, but you definitely can't do that." Isn't that what they're paid to do?

As I said in my testimony to City Council, every tweak to this tax demonstrates just how cancerous it is. It cannot be cured with tweaks.

Silly rabbit?

You actually think they thought this thru before-hand and vetted it legally?

Still a head tax and un-constitutional.

To answer clineman's question I'd pay a $1 a tomato...
$2 for a potato....
There might even be a market for bricks that would be recycled into paying stones....

Eric Fruis, Jack B., Isaac Laquedem - -

Looking at ORS Chapter 180 in general, why doesn't the Sate Administrative Procedure Act apply, requiring notice and public comment and hearings before administrative rules are adopted by Portland's Revenue Bureau

Well boys and girls, I actually asked the folks at City Hall if my being on SS excluded me from the Arts Tax because technically it was not income. That was the first thing that came to mind when I recieved my flyer in the mail.

They told me I still had to pay the tax.



If they could, they would tax you after you leave this mortal coil for benefits accrued and collected in heaven as a reward for living a good life.

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