Did Dudley really live in Washington?
The flap over GOP gubernatorial candidate Chris Dudley's avoidance of Oregon income taxes while a pro basketball player takes a wicked turn today, as Willamette Week's intrepid muckraker, Nigel Jaquiss, insinuates that Dudley may have in fact underpaid his Oregon income taxes, as opposed to legally avoiding them.
Jaquiss suggests that although he bought a home in Camas, Washington, Dudley, who also continued to own a home in Northwest Portland out toward Kyronland, might have still been an Oregon resident for tax purposes. Dudley, of course, claimed that his domicile for tax purposes was in Washington. Even Jaquiss admits that tax residency can be a tough call sometimes, but the question he's raising is potentially quite troublesome, and WW, which will surely endorse Kitzhaber come November, isn't shy about asking it.
As a tax lawyer, I find it interesting that the electorate is being treated to such a prolonged inquiry into Dudley's state tax situation from well over than a decade ago. Apparently, he isn't giving the Kitzhaber camp much else to shoot at. Meanwhile, the criminal investigation into state contracts held by Kitz's significant other passed onto and off of the news pages in a couple of days. That little problem is a lot more current, a lot more relevant, and a lot more serious.
Comments (28)
No surprise at all that the ultra-liberal portland press hammers on meaningless little factoids about the scary republican candidates while coddling the dems.
Just look at the Obama administration for a better example. There have been dozens of things committed by his administration that barely get a mention, but would have been front page scandals if Bush was in office.
Posted by mk | September 8, 2010 10:00 AM
Did Kitz live property tax free in the governor's mansion during his eight years in Salem? And then he moved to the Pearl to live property tax free up there, right?
I bet Dudley paid more Oregon income tax during those years than Kitzhaber did.
Posted by dg | September 8, 2010 10:01 AM
Except that the WWeek piece raises it from tax avoidance strategies (what tax lawyers are supposed to encourage) to tax fraud, which is a huge deal, right? I was hoping you'd put in something about your view of Nigel's analysis ...
Posted by Jonathan Radmacher | September 8, 2010 10:02 AM
I'm sure hope Nigel will follow up on Kitz's Pearl District Condo and a full analysis of all the tax subsidies, and property tax reliefs he employed there. And I wonder if Kitz claimed his residency in Bend versus the Pearl to avoid TriMet, Multnomah Co, and surcharge taxes of Multnomah Co. that we recently passed. What's good for the goose is good for the gander.
Posted by lw | September 8, 2010 10:14 AM
I wouldn't hold it against Dudley himself if his tax avoidance were ultimately proven illegal; he was following the advice he was given.
What I will hold against, him, however, is that he sought to benefit from living in Oregon while shirking paying his share of the bill. Now on a lark he wants to be governor of a state he has heretofore shown no visible interest in leading and has devoted no time working in the trenches trying to make better.
I'm sure he's a nice guy and has worked hard at what he chose to devote his life to, and I agree that Kitzhaber himself and his ideas are tired retreads. I really wish the Dems had found some fresh blood. But at least Kitz has devoted the latter part of his career to public service in Oregon, lives in Oregon, and understands it intimately.
Posted by Eric | September 8, 2010 10:24 AM
What a lame story.
Of all the things for Nigel to dig into that's got to be one of the least suspicious, least interesting and most useless.
Has he been body snatched by BlueOregon?
And why does such a long term critic of all things Goldshmidt and his still around cronies appear to want to keep it all entrenched?
If there were ever a time where some healthy probing of the statsu quo could reap some big rewards for Oregon it is now.
Yet the beat goes on with Nigel taking a pass at the opportunity? Marvelous.
Throw a dart at the goverment listings and there's more to look at than Dudley's residencey 10 years ago.
Take JPACT last week.
TriMet GM Neil McFarland waltzed in there and repeated TriMet's lie that only at the end of this July did they find out the feds would not fund more than 50% of Milwaukie Light Rail. It's documented that the feds told TriMet over a year ago and warned them not to plan on the 60% they were peddling.
In November 2008 Trimet knew.
http://trimet.org/pdfs/pm/Steering_Committee/Nov_2008/Finance_Table.pdf
In 2009 they were told.
http://portlandafoot.org/documents/OrangeLineFTALetter.pdf
Just yesterday I heard a radio newscast report the recent added funding raid by JPACT. The stoyr reported that reason for the hole to fill and urgency was that TtriMet only found out recently about the fed fudning. The lying is institutionlized around here.
Mcfarland also told the wholy corrupted JPACT rubber stampers that Milwaukie Light Rail is the catalyst for OHSU/OUS Life Sciences Collaborative Center in SoWa.
Just like the The Tram is the Linchpin line.
The Joint Policy Advisory Committee on Transportation then went on to approve the raiding of $27 million from the region's transportation revenue stream to help pay for Milwaukie Light Rail, Lake Oswego Streetcar and Barbur Blvd/99 MAX line. That's $27 million less for future routine infrastrucure projects
How can TriMet, Metro et al, lie about anything and everything, involving the misappropriation of billions, rob millions from essential services and cover up failure on a grand scale and it's not more of a curiosity or story than Dudley's residency?
Posted by Ben | September 8, 2010 10:37 AM
he sought to benefit from living in Oregon while shirking paying his share of the bill
How so? Living in WA doesn't negate the need to pay OR income taxes on OR sourced income.
Posted by mp97303 | September 8, 2010 10:40 AM
Since winning the Pulitzer, Nigel has been stuck with playing "who's got the pickle." In his hunt for huge Kosher dills, he usually comes up with a gherkin. Then BlueOregon water cooler kids serve the gherkin with a bunch of words that end in "bag."
Posted by Garage Wine | September 8, 2010 11:01 AM
Can Jack or someone explain the OR income tax rules for people who live in Washington?
My understanding has been that if you work in OR and live in WA, that you still pay full OR income taxes? Have I been mistaken in this?
Posted by Snards | September 8, 2010 11:32 AM
Snards
You are correct. Any income earned in OR is OR taxable. Now if you had taxable interest/dividends etc, you wouldn't pay OR tax on those while living in WA
Posted by mp97303 | September 8, 2010 11:55 AM
Right-o on the OR income tax situation.
I worked in Oregon while living in Washington for more than 20 years, sent hundreds of thousands of dollars in income taxes to Salem during that time.
The mere fact of Washington residency, or residency anywhere else, does not exempt people from paying Oregon income tax, if the income was earned in Oregon.
Remember all that mishmash about using income taxes to finance the proposed MLB stadium a few years ago. Jack should remember. Steve Kantor was one of the leading proponents.
Posted by The Other Jimbo | September 8, 2010 12:16 PM
Thanks for the clarification. So someone with high capital gains, or other investment income, could benefit from living in Washington.
Posted by Snards | September 8, 2010 12:20 PM
Also someone (an athlete, for example) who earns part -- say, half -- of his pay working out-of-state.
Posted by Allan L. | September 8, 2010 1:27 PM
Snards
Exactly. When you get beyond all the political mumbo jumbo, OR's high capital gains tax rate is probably the biggest threat to business growth. Business/personal tax rates not so much.
Posted by mp97303 | September 8, 2010 1:27 PM
Isn't Ron Wyden living in NY a much more interesting story?
Posted by john | September 8, 2010 2:31 PM
someone with high capital gains, or other investment income, could benefit from living in Washington.
Probably not for long. Washington voters appear ready to pass a high-earner income tax, I-1098, this coming November. It would impose a five-percent tax on single incomes above $200k, or $400k for couples, while reducing the regressive business and occupation tax. (Bill Gates Sr. is bankrolling the campaign.) Polls have been consistently favorable, but even if it doesn't pass this November, the writing is on the wall. Washington is going to have an income tax by the middle of this decade. This will greatly benefit both states -- Washington will no longer have to rely solely on regressive, cumbersome and unstable sales taxes, and Oregon will no longer suffer nearly as much capital flight to Washington (which currently doesn't much benefit Washington).
Posted by Semi-Cynic | September 8, 2010 2:38 PM
Did this article crash WW's site?
Posted by Spikez | September 8, 2010 2:53 PM
Apparently, he isn't giving the Kitzhaber camp much else to shoot at.
That's the magic of the candidate with no prior political experience.
Posted by none | September 8, 2010 3:11 PM
"Isn't Ron Wyden living in NY a much more interesting story?"
Sure.
Since his wife lives there and votes there and his kids live there with this wife Wyden obviously lives there.
Isn't that special.
And I'm sure he thinks Mayor Creepy is doing a fine job.
Posted by Ben | September 8, 2010 5:07 PM
Except that the WWeek piece raises it from tax avoidance strategies (what tax lawyers are supposed to encourage) to tax fraud
Nobody's alleged fraud. Not every underpayment of tax is fraudulent -- if indeed there was an underpayment in this case.
Posted by Jack Bog | September 8, 2010 5:55 PM
"Washington will no longer have to rely solely on regressive, cumbersome and unstable sales taxes"
Are you joking? There is nothing more regressive than taxing production rather than consumption!
Posted by Joey Link | September 8, 2010 5:56 PM
everyone who followed the blazers knew Dudley had a house in Camas. Oregonian and the Tribune both reported it at the time when he was a Blazer.
Posted by geoff | September 8, 2010 10:22 PM
Sales taxes in Washington state take three times more (as a percentage of income) from people making less than $20K as they do for those making more than $130K. That's regressive.
Now let's all take a moment to remember Huey Long, who was shot 75 years ago on September 8 and died September 10, 1935.
Posted by darrelplant | September 9, 2010 8:46 AM
On the fraud piece, wouldn't paying taxes as a non-Oregon resident, on Oregon income, include some kind of representation about NOT being an Oregon resident? And if that wasn't true, then wouldn't it go a ways toward fraud (instead of just an underpayment)?
Posted by Jonathan Radmacher | September 9, 2010 9:47 AM
Please stop grasping at straws. Not every erroneous tax return is fraudulent. Yours probably has some mistakes on it.
Tax fraud requires knowledge that the return is wrong. The issue here would be much too cloudy for that. The return might be wrong and not even negligent, much less fraudulent. Then again, it might be perfectly correct.
Posted by Jack Bog | September 9, 2010 9:55 AM
Jack, in my experience, when it comes to the IRS fraud is in the eye of the beholder aka the IRS. They think they get to decide what is and what is not fraud and generally the courts back them.
Posted by LucsAdvo | September 9, 2010 1:22 PM
Fraud cases are hard for the IRS to win. It has to produce "clear and convincing evidence" to impose a civil fraud penalty, and proof "beyond a reasonable doubt" for a criminal conviction. Those are heavy burdens of proof, as compared to the usual "preponderance of the evidence" (50% + 1) that the revenuers have to produce in a simple tax case, with no fraud alleged.
Posted by Jack Bog | September 9, 2010 9:04 PM
You can't blame someone for utilizing the system to his advantage. That's just human nature. He's not cheating anyone out of anything. He paid his income taxes like any other Oregon worker.
When Phil Knight sells his stocks in Oregon -- he pays quite a bit in taxes to the state. I can't help but think if I were in his position, would I just pick up and move to Washington instead of paying capital gains taxes on major stock sales?
Are we to be spiteful of that? Or maybe Oregon's capital gains taxes need another look?
Let's not be angry at Dudley, but rather look at why he did what he did. And I probably won't be voting for the dude either.
Posted by ws | September 9, 2010 9:21 PM