OCPP's Sheketoff talks tax reform

Proposed changes to Oregon’s tax system were discussed during a Wednesday, Aug. 18 interview on Grants Pass-based KAJO radio by Chuck Sheketoff, executive director of the Oregon Center for Public Policy (OCPP).

Founded in 1997, OCPP conducts research on budgetary, tax and economic policies at the state and federal level. It also does some lobbying, pushing for policies that help low and moderate income Oregonians, Sheketoff said.

Sheketoff said that OCPP would like to see changes made to the state’s “kicker” law. Oregon is the only state in the country with such a policy, he said.

Under the “kicker,” Sheketoff explained, the state sends money back to individuals and corporations if “unanticipated revenue” to the state is off by 2 percent or more compared to initial projections. “It has prevented Oregon from having an adequate rainy-day fund,” Sheketoff said. “It’s really what has caused our revenue problem.”

The “kicker” was enacted by the Legislature and referred to voters in 1979, when times were more “flush,” Sheketoff said. In the 1990s, another measure was passed by voters that put the “kicker” policy in the state Constitution and required a two-thirds vote of the Legislature to override it.

Originally, Sheketoff said, the “kicker” was given to residents as a credit on their taxes. It later changed to the form of a check being sent to taxpayers, he added.

Sheketoff also called for an expansion of the state’s Earned Income Tax Credit (EITC). He said that would be the best way to provide targeted tax relief for low and moderate income adults who work and have children.

A previous OCPP study showed that low-income Oregonians have a “fairly high” tax on their income, compared to people in other states, Sheketoff said. They pay a greater share of their income in state and local taxes than any other group, he asserted, and the highest income Oregonians pay a lower share of their income in taxes than any other group.

Most states don’t levy an income tax on the working poor, Sheketoff said, but in Oregon, the income tax kicks in at $19,800 for a married couple with two children. That income level is more than $2,000 below the federal poverty line for a family of that size.

“We have one of the highest taxes in the county on working poor families and near poor families,” Sheketoff said. “At the federal level, if you’re poor, you don’t pay income taxes and in many states if you’re poor, you don’t pay income taxes, but in Oregon, you do.”

Sheketoff also said that the Legislature should give more scrutiny to all of the state’s various tax expenditures.

Every two years, the state produces a tax expenditures report. Sheketoff was one of the lead lobbyists who pushed for that policy during the 1995 legislative session.

Some expenditures are incentives like the EITC, and others are credits for behaviors that the state wants to encourage, Sheketoff said. Examples of that include subsidies for energy conservation improvements for homes and businesses and the Business Energy Tax Credit program.

It is difficult to eliminate expenditures, Sheketoff said. That is because they are considered revenue raising measures, which require a 3/5 vote of the Legislature to be changed. There also are political considerations involved.

“You cannot find a tax expenditure that does not have a constituency,” Sheketoff said, although some are “indefensible” as budget priorities.

Sheketoff maintained that the state government has a revenue problem and not a spending problem. In order to balance its growing budget deficit, Sheketoff suggested that the state derive more income from profitable corporations and look at emulating the more “progressive” aspects of other states’ tax systems.

“There’s no one state that has the greatest tax structure,” he said.

For more information, visit ocpp.org.

Fair Use Policy