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JUST THE FACTS
I am writing regarding your recent sales tax column ("Hooray for a Sales Tax," 500 Words, WW, Jan. 7, 1998). First let me say I am a proponent of a sales tax. I supported the last significant effort in 1985, which was a pretty well-written bill. I also agree with your position of not completely doing away with the property tax. However, I take exception to your implication that putting services into the base will extract tax from the service providers. It will not. Excuse me for sounding like the Cascade Policy Institute, but it will only pass the tax on to the users of services, just as it does to the purchasers of taxable goods. There may be good reasons to include services in the tax base, but collecting tax from professionals and other service providers is not one of them. The best reason may be to have as broad tax base as possible so the rate can be low. As if there were not enough political opposition to a sales tax, proposing the tax on services will bring out more. Few if any states currently tax services. When they propose to, it brings out a hue and cry from professionals that normally kills the idea. The 1985 bill did not tax services, but it did not specifically exempt them, allowing for their addition at some future date. If you want to support a sales tax, do it with the facts, not an illusion. Bob Wynhausen, Northwest 87th Terrace P.S. Professional service providers do pay a reasonable share of taxes in Oregon. They certainly pay income tax, in many cases self-employment taxes, and those in Portland, Multnomah County, Tri-Met and Lane County pay additional income taxes for local purposes. The Portland and Multnomah County taxes are substantial for high-income firms and individuals.
I'M A LOSER, BABY
Any major change in taxes creates many winners and many losers. Your editorial, once again pushing for a sales tax, fails to indicate who the winners and losers are ["Hooray for a Sales Tax," 500 Words, WW, Jan. 7, 1998]. LOSERS--RENTERS. One out of three Oregonians rent. They would have to pay a sales tax yet GET NO PROPERTY RELIEF. The old myth that rents would go down when landlords saw their property taxes go down was exploded after the massage of Measure 5 in 1990. Landlords' taxes went down by $13.9 million according to the Legislative Revenue Office, while one-bedroom rentals went up by 36 percent, two-bedroom by 34 percent and three-bedroom by 40 percent according to typical examples by Apartments for Rent, the nation's leading apartment magazine. LOSERS--INCOME TAX PAYERS. Since the property tax is deductible from income taxes while a sales tax is not, the exchange of $1,000 in sales taxes and a cut of $1,000 in property taxes would mean $280 more in federal income taxes and $90 more in state income taxes. Winner would be IRS. LOSERS--OREGON MERCHANTS. Oregon has a very favorable balance of trade with surrounding states. Portland, the largest city in the United States without a sales tax, does as much as $143 million more in retail sales than Seattle although Seattle has a larger population and higher per capita income. Not only our border cities but many interior merchants do considerable business by shoppers from other states coming here to avoid their state regressive sales tax. The Governor's Commission on Tax Fairness in Washington found that many Washingtonians are buying mail order or through TV shopping clubs. Technically, these buyers are supposed to pay a "use tax," but there is no enforcement. LOSERS--PROFESSIONALS. Previous sales tax proposals have called for a sales tax on goods only. The one filed last week calls for a tax on services as well as goods. This is going to be an onerous bookkeeping nightmare for lawyers, accountants, architects, barbers, builders and hundreds of other professional people. WINNERS--ABSENTEE OWNERS OF OREGON REAL ESTATE. The big winners of shifting from a property tax to a sales tax will be the absentee owners of Oregon real estate. The Canadians, Japanese, Germans, Californians, Texans, New Yorkers and other non-Oregonians who own an estimated one-half of all the commercial industrial and business real estate in Oregon will get millions [of] dollars in relief on their property taxes BUT THEY WON'T PAY AN OREGON SALES TAX. The tax cut they get will have to be made up by Oregonians in the form of higher income or sales taxes. This means the proposed sales tax will be "Oregon's Foreign Relief Program." Mike Ettlinger of Citizens for Tax Justice says, "A change in tax policy gives lots of winners and lots of losers, and the losers stay upset a lot longer than the winners are grateful." Phil Dreyer, Chairman
No Sales Tax League of Oregon
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