New Report Aims to “Clear the Air” on Tax Day

News Release
April 15, 2001

A new report released today by the Oregon Center for Public Policy finds that the tax burden in Oregon is near its lowest levels in the last twenty years. Total state and local taxes as a share of income in Oregon have gone from 11.8 percent in 1988 to 10.2 percent in 1999, steadily declining over the past ten years. Compared with six other Western states, Oregon's household tax burden is in the middle and its business tax burden is the lowest.

The report uses a variety of data sources to analyze current levels and past trends in the tax burdens Oregonians face, in an attempt to inform the debate over taxes. "Annual surveys show Oregonians generally are not knowledgeable about state government revenue sources and expenses," noted Jeff Thompson, an economist at the Silverton-based research institute and the report's author. "Much of this is no doubt due to the zealous misinformation campaigns by groups who seek to de-fund important public services such as education and health care," he added.

"Despite faltering public education and a shredded safety net for the poor, children and the disabled, anti-government activists continue to press for further tax cuts that primarily benefit Oregon's most economically comfortable. Their thirst for tax cuts seems to know no limit as they soak Oregonians with misinformation about our tax system," said Thompson.

"Contrary to claims of anti-government activists, tax levels in Oregon are not high and have not been rising. Total state and local tax collections have trailed behind economic growth in Oregon for some time now," said Thompson.

The most remarkable aspect of Oregon's overall tax structure is its regressivity. While Oregon's single-largest tax, the personal income tax, is partially based on the ability to pay, the overall tax structure places a higher burden in low-income households. The total effective state and local tax rate of the lowest-income 20 percent of Oregon households is 12.3 percent, compared to the 11.8 percent rate of the highest-income 20 percent.

Oregon taxes low-income households at higher rates than upper-income households because of the regressive components of the tax structure – property and excise taxes – and because Oregon taxes families at income levels well below poverty. Oregon levies the eighth highest income tax on four-person, poor working families. Oregon levies the nation's third highest tax on four person families who are slightly above the poverty level.

In addition to the declining total state and local tax burden, the effective federal tax rates on middle-income families have also fallen in recent years. "Data from the Congressional Budget Office show that federal taxes on middle-income families are at their lowest point in the last thirty years," noted Thompson.