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Oregon's tax system is out of synch
with current economic realities. The two most significant functions of government are the raising and spending of our money. This shopworn observation is worth repeating, if only to make plain why this newspaper spends so much time watchdogging issues of government finance. Most recently, we've become convinced that Oregon's tax system is bankrupt. Consider: We have an income tax that is at once regressive and the highest in the United States. Our property tax is riddled with exemptions and made more complicated by the antics of Bill Sizemore. Homeowners are carrying the tax burden, while businesses continue to get relief and out-of-state tourists pay nothing. Our tax structure fails to capture the real growth the Oregon--the services provided by lawyers, doctors, architects, insurance sellers and others in an increasingly white-collar economy.
It is a tax system that, because it is constructed on such a narrow base, will disrupt public services disproportionately when the economy turns sour, as it inevitably will. If you set aside the question of whether our tax code raises too much or too little money, very few state leaders disagree with these views. Many have said so to our faces. Getting them to do something about it is an entirely different matter. That is why we welcome the initiative recently filed by Ross Smith, a retired CPA from Eugene. It would amend the constitution to replace the property tax with a sales tax on goods and services. We have some concerns with Smith's initiative, one of which is the proposal to completely eliminate the property tax. But his underlying thinking merits discussion. The current property tax is an inefficient, ineffective and unfair way to raise money. A sales tax--on both goods and services--would have many benefits. It would broaden the tax base, increase the fairness of our tax code and capture an area of economic activity that currently escapes its fair share: the service sector. It would provide the state with stable funding, move us past the divisive tax initiatives of the past seven years and allow Oregon to invest appropriately in its future. Many civic leaders think such talk is cockamamie--not because a sales tax on goods and services isn't sensible policy, but because it would fail at the polls, as sales taxes have done so many times before in this state. This sort of thinking is akin to generals fighting the last war. Fact is, much about this state has changed dramatically in the past seven years. Oregonians are far more white collar, far more independent in their voting habits and not necessarily burdened with the prejudices of the past (more than 225,000 people have moved here from out of state since 1990). They are also plenty willing to consider new ways to address the challenges that face them--if someone, anyone, would simply articulate the options. If the state's leaders won't do it, maybe Ross Smith will. |
