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Taxes Tell About Life

Commentary
April 4, 2004By Chuck Sheketoff

Sheldon Cohen, a former commissioner of the Internal Revenue Service, once wrote, "People think taxation is a terribly mundane subject. But what makes it fascinating is that taxation, in reality, is life. If you know the position a person takes on taxes, you can tell their whole philosophy. The tax code, once you get to know it, embodies all the essence of life: greed, politics, power, goodness, and charity."

That's certainly true of Oregon's tax code. It reveals Oregonians' priorities and reflects both our goodness and charity and certain groups' power and greed.

The Working Family Child Care Credit is an example of Oregonians' goodness. The credit efficiently helps low-income families absorb the high costs of child care. This is especially important because Oregon's child care assistance program for low-income working families - the Employment Related Day Care (ERDC) program - has been repeatedly scaled-back by the Legislature and remains under-utilized.

If budget cuts in the ERDC program contradict the goals of the Working Family Child Care Credit, the structure of Oregon's income tax contradicts the goals of its welfare program. For over ten years now Oregon's Legislature and human services agency have been promoting a welfare policy that emphasizes work as the way out of poverty. Twice the voters have agreed with the policy by raising the minimum wage. Yet, compared to other states, we have a significantly high tax on the work effort of poor Oregonians and those relying on the minimum wage. That income tax policy runs counter to Oregon's "make work pay" anti-poverty agenda.

Oregon begins to tax a single parent with two children when the family income equals $13,500 (that's $1,175 below poverty). At the same time, through a combination of two tax credits, Oregon exempts from income taxes the last $16,667 earned by a household wealthy enough to purchase a new hybrid car. Wouldn't an expanded earned income credit that raises the tax threshold so the working poor and minimum wage workers aren't taxed on their work effort be a better priority?

The deduction for home mortgage interest is an example of a worthwhile tax break taken over by greed. Originally designed to help more families accomplish the American dream of homeownership, today the deduction can be used to write off the interest on up to one million dollars of indebtedness. Oregon has a stubborn level of homelessness and a dearth of affordable housing. Is it appropriate that Oregon taxpayers subsidize the purchase of a $900,000 house even though the Legislature can't find adequate funds to help build affordable housing and too many Oregonians live on the streets?

Similarly, Oregon's wealthiest seniors can deduct all of their medical expenses from their state income taxes, even as budget cuts force less fortunate seniors and others to lose access to health insurance and long-term care.

At a time when too many Oregonians are out of work, Oregon continues to give tax breaks that encourage Oregon companies to produce income in other countries.

Oregon's legislature recently created a large tax break for companies that predominantly sell their products out of state. Some of Oregon's largest and most profitable companies, such as Nike, Intel, Monaco Coach, and Columbia Sportswear, get the tax break, even if they don't create a single new job here in Oregon. In fact, they get the tax break even if they lay off Oregon workers.

Oregon's tax code does reflect life here: the greed, the power, the politics, the charity, and the goodness.

Charles Sheketoff is the executive director of the Oregon Center for Public Policy. He can be reached at [email protected]