They also bought themselves a new and very expensive city bureaucracy to collect the tax.
Every adult in the city above federal poverty levels is supposed to pay a flat $35 annual tax. The city plans to comb through voter rolls, vehicle registrations, water bills and Internal Revenue Service records to find you and send you a bill due on April 15, 2013.
“We need to educate every Portland resident about paying this,” says Jessica Jarratt Miller, executive director of Creative Advocacy Network, which backed the tax measure. “Educating people will require mailing a lot of information.”
City records show the overhead costs the first year are more than $1 million to collect an estimated $9.9 million in taxes. That’s more than 10 cents of every dollar collected.
“That’s a very low cost,” says Revenue Bureau director Thomas Lannom. “The lion’s share of that cost is mail.”
The city estimates the annual overhead will drop to about $550,000 after startup costs—that’s still well above, as a percentage, the administrative costs of collecting other taxes. (Multnomah County spends 1.6 cents for every dollar it collects in property taxes.)
Records reviewed by WW show the city plans to assign four full-time employees to collect the tax.
Eric Fruits, a Portland economist, says the Revenue Bureau will have problems sending every citizen a bill and three reminder postcards. “I’ve said all along, collection issues are going to be a real problem on this tax,” Fruits says. “How are you going to identify every single adult resident in Portland?”
As it turns out, the city didn’t want the job. Records show city officials asked the Oregon Department of Revenue last June to oversee arts tax collection. The state said no, saying its staff was stretched too thin.
But the city’s Revenue Bureau from 2003 through 2010 administered the Multnomah County Personal Income Tax. Based on that job, the bureau expects 85 percent of Portlanders to pay the arts tax its first year.
“Most people will self-identify,” Lannom says. “We’re not building anything from scratch.”