The Oregon Center for Public Policy, a Silverton-based research institute, today called a legislative proposal to cut capital gains taxes while temporarily increasing income taxes “a reverse Robin Hood and an appalling lesson for Oregon’s school children.” Legislators negotiating solutions to Oregon’s revenue shortfall have suggested cutting capital gains taxes as part of the package of cutting state services, income tax increases, and borrowing.
“While we do not know the specifics of their closed-door discussions, we do know that a capital gains tax cut primarily benefits the wealthiest one-percent of Oregonians,” said Charles Sheketoff, executive director of the Oregon Center for Public Policy. “Typical Oregonians, those in the middle of the income distribution, will receive virtually no benefit from the capital gains tax cut,” said Sheketoff. The wealthiest one percent of Oregonians have incomes in excess of $296,000 and averaging $777,700.
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Proposal is “a reverse Robin Hood and an appalling lesson for Oregon’s school children” (PDF, with charts), September 5, 2002.
Sheketoff noted that the 1990s’ economic boom benefited the wealthiest Oregonians much more than typical families. “Oregon’s richest reaped the lion’s share of the boom,” said Sheketoff. “If anyone needs a tax cut, it’s the poor who saw their incomes decline over the course of the 1990s.”
According to the OCPP, during the 1990s the wealthiest one percent of Oregonians saw their incomes increase by 98 percent. In contrast, median income Oregonians – the typical Oregonian – saw only a nine percent increase. From 1979 to 2000, the top one percent saw their incomes increase by 171 percent, while middle income Oregonians saw virtually no change in their income (0.9 percent decline).
“It is bizarre, especially in an election year, that legislators would consider cutting taxes for a small but very rich minority while raising taxes for 99 percent of Oregonians,” said Sheketoff.
Sheketoff also noted that the proposal to lower taxes on capital gains “violates long standing principles that taxes should be progressive, from the biblical doctrine that ‘a few pennies from a poor woman’s purse cost her more than many pieces of gold from a rich man’s hoard’ to the Legislature’s own policy enacted in 1991 that our tax system should be based on ‘ability to pay’.”
“This capital gains tax cut is a thinly veiled attempt to gain support for the tax package from the few wealthy people who bankroll Bill Sizemore and the high-tech execs who are praying that the stock market rebounds, but it will do nothing for most Oregonians,” said Sheketoff.
“Oregonians want tax reform that provides adequate resources for important government services like health care, food assistance, education, and public safety,” said Sheketoff. “You don’t solve a long-term revenue shortfall problem with a long-term tax cut for the wealthy,” he added.
“This sends an appalling message to the kids beginning school this week,” said Sheketoff. “Perhaps teachers can use this opportunity to teach about income and tax inequality, and the influence of the rich on Oregon politics.”
Sheketoff noted that the Legislature’s own tax incidence model shows that the lowest income Oregonians have the highest tax burden. “The proposal for an across the board tax increase with a capital gains tax cut will only make matters worse,” said Sheketoff. “It is a down payment on continued income and tax inequality.”
The Oregon Center for Public Policy is a non-profit research institute studying budget, tax, and other public policies important to low and moderate income Oregonians, the majority of Oregonians.
NOTE TO EDITORS AND REPORTERS:
A figure and table that demonstrates the differences between an across the board tax increase, an across the board tax increase with a capital gains tax cut, and a targeted tax increase based on ability to pay is available above.