Oregon’s tax system weighs more heavily on the poor than anyone else

Sign pointing to were to make tax payments

Oregon’s tax system weighs more heavily on the poor than anyone else

Sign pointing to were to make tax payments
Oregon's tax system remains inequitable

Oregon’s tax system weighs more heavily on the poor than anyone else

News Release

Oregon’s poorest families pay more in taxes as a share of income than any other group in the state — more than middle-income families and the rich. That is one of the findings of a new report by the Washington, D.C.-based Institute on Taxation and Economic Policy (ITEP).

“Oregon’s tax system remains inequitable,” said Daniel Hauser, Deputy Director of the Oregon Center for Public Policy, who examined the report. “Our tax system should reduce Oregon’s record-high levels of income inequality, but instead it makes it worse.”

The ITEP report found that, on average, taxes take up about 12 percent of the income of Oregon’s lowest-earning tax fliers, compared to 9.7 percent of the income of the middle fifth, and 10.4 percent of the income of the richest 1 percent. As such, Oregon’s “overall system tilts regressive,” the report said.

Even so, when considered in a national context, Oregon’s tax structure looks better than that of most other states. According to the study, Oregon has the 10th least regressive tax system among all states and the District of Columbia. The nation’s most regressive tax structure is in Florida, while the most equitable is that of the District of Columbia — one of six states where the poor pay the lowest effective tax rate.

“When you ask people what they think a fair tax code looks like, almost nobody says we should have the richest pay the least. And yet when we look around the country, the vast majority of states have tax systems that do just that,” says Carl Davis, ITEP’s Research Director. “There’s an alarming gap here between what the public wants and what state lawmakers have delivered.”

The ITEP study, Who Pays?, takes into account all major state and local taxes, including personal income taxes, corporate income taxes, sales taxes, property taxes, estate taxes, and excise taxes such as gasoline and cigarette taxes.

“Oregon’s lowest-income residents are struggling to afford rent and put food on the table. Asking these Oregonians to pay a larger share of their income in taxes than the highest-income Oregonians is a disgrace,” said Hauser.

He called on the Oregon legislature to take steps to reverse this situation by “working on both ends of the income ladder.”

“Increasing taxes on the rich by creating an additional tax bracket for people with more than $1 million in annual income, needs to be on the table,” said Hauser. ”A ‘Millionaire’s Tax’ would not only help correct our unfair tax structure, but also raise revenue to invest in child care, housing, and other essential services.”

Hauser also urged lawmakers to ramp up Oregon’s Earned Income Tax Credit (EITC), a refundable tax credit that helps low-income working families. The Oregon EITC largely mirrors the federal tax credit that goes by the same name. Both in Oregon and nationally, the tax credit has enjoyed a long record of bipartisan support, said Hauser.

“A big boost to the Oregon EITC would help to correct Oregon’s flawed tax structure by lowering the taxes of those who earn the least,” said Hauser. “More importantly, it would help struggling families make ends meet.”

The Oregon Center for Public Policy is a non-partisan, non-profit institute that does in-depth research and analysis on budget, tax, and economic issues. The Center’s goal is to improve decision-making and generate more opportunities for all Oregonians.

The Oregon Center for Public Policy is a non-partisan, non-profit institute that does in-depth research and analysis on budget, tax, and economic issues. The Center’s goal is to improve decision-making and generate more opportunities for all Oregonians.

OCPP

OCPP

Written by staff at the Oregon Center for Public Policy.

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