A Tax System that Matches Oregon Values

March 25, 2008By Michael Leachman

This tax season, a minimum wage worker who was employed full-time last year and raising one child will pay about $321 in state income taxes. That’s equivalent to the cost of about a month’s worth of food based on Bureau of Labor Statistics data.

For a single parent working at minimum wage $321 is a lot of money, especially when you compare it to the income tax bill that Intel Corporation, with $9 billion in profits, likely paid last year: 10 bucks.

Why is Intel, with $9 billion in profits, probably paying only 10 bucks? Because over the last decade the actions of Oregon’s legislature have not matched the values of Oregonians.

Intel hasn’t always paid a pittance in state income taxes. In 1997, the company paid over $50 million in income taxes to Oregon. The company boasted at the time that it was the state’s best corporate income taxpayer.

Today, though, thanks to huge corporate tax breaks handed to it by the Oregon legislature, Intel likely has joined the ranks of the majority of Oregon’s corporations, who get off paying just 10 bucks a year in income taxes on their profits.

That’s right, Intel, with $9 billion in profits, probably paid about three pennies for every dollar in state income taxes paid by a young working mother trying to raise a child on an annual income of about $16,200.

The story doesn’t stop with Intel, either. Most corporations operating in Oregon pay three cents for every dollar paid in taxes by a minimum wage worker. Two-thirds of the corporations operating in Oregon, including 20 corporations with profits of $1 million or more, get away with paying just 10 bucks a year in state income taxes. It would take 32 of those corporations to match the income taxes we ask that young mother working at minimum wage to pay.

It’s time for Oregon legislators to establish a new set of priorities for Oregon, priorities that better match the values of Oregonians. Oregon legislators wrongly shifted more of the costs of public structures away from big corporations and onto minimum wage workers and the rest of us. Let’s build a tax system that better matches Oregon values.

Oregon could eliminate income taxes on the minimum wage working mother by increasing the state Earned Income Credit. Such an increase would help that mother keep food on her family’s table, instead of sending a month’s worth of her family’s food budget to Salem to help pay for public structures — universities and state police, for instance — that Intel and other corporations operating in this state rely upon every day and get essentially for free.

What would it cost to eliminate the income tax on the minimum wage family? A little less than $50 million a year, or roughly the amount that Intel proudly paid in state income taxes a decade ago.

Oregonians believe hard-working families deserve food on the table. Next year, the legislature should better match its actions with Oregon values by increasing the state Earned Income Credit and raising the minimum corporate income tax so that corporations like Intel pay something similar to what they used to pay.

Think about it. Profitable Intel could once again proudly proclaim itself to be the state’s best taxpayer, and families struggling to make ends meet by working at a minimum wage job could open their cupboards and find that Salem had decided to leave them a little more to eat.

Michael Leachman is a policy analyst at the Oregon Center for Public Policy, which does in-depth research and analysis on budget, tax, and economic issues with the goal to improve decision making and generate more opportunities for all Oregonians.