I would like to see Oregon eliminate the income tax and institute a sales tax with certain goods being exempt, such as food and household supplies. It would have to be revenue neutral and I would model it similar to how Washington does. I would assume 7% would be the magic number.

I got my taxes back this weekend and my effective tax rate for Oregon was 8.4%. I did a little math, and while I'm not going to disclose my income figures, let's use a few examples to see how it pencils out.

Household taxable income of $100,000. Oregon income tax would be $8400. How much would I have to purchase to pay $8400 in sales tax? $120,000 worth of goods and services.

Household taxable income of $50,000. Oregon income tax would be $4200. I'd have to spend $60,000 on goods and services to reach that.

I always hear that a sales tax hits the poor the hardest, but the way I see it, most people would pay less and the upper income earners would pay more because they make larger purchases such as luxury cars, boats, clothes, eating out, etc.

This seems to work well for Washington, why can't it work in Oregon?

It would work if you can figure out how to prevent the population as a whole from voting it down. Why the population doesn't embrace this change is rooted in mistrust of government and a lack of math skills. You can teach them the math, but how can you get them to trust government after the last 8 years?

The other benefit of this method of taxation you failed to mention, and it is important, is the amount of tourist dollars spent annually in Oregon. Tourists buy expensive restaurant meals, souvenirs, clothing, lodging, gasoline, etc. most of which has no tax on it at all except gas and lodging in the big cities. Out of staters come to Oregon for large jewelry purchases, high end clothing purchases, etc. because they save so much on taxes imposed in their home state/city. This is a huge untapped source of revenue for Oregon that could lower the tax rate for residents. It's where the financial future of this state is, and the faster we get there the better off we'll all be.

Yes, I'm aware of the tourist dollars which would be a benefit. The state needs "X" revenue to run. If tourists contribute "Y" towards sales tax revenue, the remaining amount of revenue needed by Oregon residents would be X-Y, which means less for all Oregonians.

The reason people are against it is that they have never offered a sales tax with an elimination of the income tax. I would not support a sales tax without this provision, otherwise, they'd eventually raise the income tax upward if they wanted to. Eliminating the income tax would allow this to pass a vote if you ask me.

I think your biggest road block is changing the minds of Oregonians. For whatever reason our independent progressive spirit seems to die on this issue.

I would certainly go for a sales tax with no income tax.

One of the issues (and there are many) that I've seen with the whole sales tax proposal for Oregon is that those who support it never speak definitively about reducing rates on or completely eliminating the state income tax. Voters are afraid that if they voted to enact a sales tax, the legislature would do little to change the state income tax.

Unless there is a substancial reduction in property taxes, no-go on a sales tax from this end.

The State of Washington gets only about 1/2 of its operating revenue from its sales tax. The other half comes from a steep tax on businesses - a Business & Occupation (B&O) tax. It's a tax on GROSS revenue, not net income, so you can't deduct anything or pay only $10/year like Oregon corporations can if they can show a paper loss. Even if a Washington corporation loses money, it still pays the same rate of tax on its revenue.

(Rates do vary by trade - for example, big grocery chains that operate on a low profit margin pay a much lower rate of tax than other businesses.)

So, if you want a sales tax in Oregon to replace income tax and maintain about the same level of spending we have today, you're either looking at a 12% to 14% sales tax (Washington taxes food as well right?) or a restructuring of the Oregon corporate tax as Washington has - and as I understand it, businesses HATE Washington's tax structure.

Since a sales tax is a flat tax (and again, if you want to maintain current Oregon budgets), it would result in a huge reduction in taxes paid by the wealthy and a modest rise in taxes paid by the lower and middle classes; low income people who today pay no state income taxes would wind up paying them if we have a sales tax, unless we institute some sort of rebate system (payments to low income Oregon residents).

Andy--- The voters haven't trusted the boys in salem for over 30 years. You won't get past that issue.

As for tourists who visit Oregon: they pay lodging tax (all over Oregon) and rental car taxes. Given that our lack of sales tax probably draws some visitors to Oregon (or encourages people passing through to spend money here and not some other state), having a sales tax like everyone else might reduce some economic activity here. One way to recover some more of the revenue might be to increase hotel and rental car taxes a bit. Our hotel tax is already less than Seattle's, for example.

Washington taxes food as well right?

Yes and no.

If I go to Mickey D's and get food (and I use that term loosely), yes, there is sales tax.

If I go to Winco and do my grocery shopping then there is no tax on most items.

If I go to the gas station and buy a 1 liter bottle of diet Coke and a 1 liter bottle of water, there is tax on the pop but not the water!

I think there are a bunch of drunk crack heads in Olympia that make up the rules.

Why keep voting them in office then? If you don't like who is running, why not run yourself? Its so easy to be a PEBKAC instead of actually fixing things.

Trust me, 90% of them in Oly didn't get my vote. Especially the head bimbo.

That being said, I was using that statement to make the point that there is no rhyme or reason to the way they decide what is charged sales tax and what isn't.

For example: Why pop but not water?

Sales taxes? Noway José. Sales taxes are regressive which means it affects those most who are unable to pay them.

Lots of cheating when it comes to sales taxes; you'll be required to collect sales whenever selling a large ticket item such a an auto or boat. Phony sales receipts abound.

This has come up before in other threads, but do any Washingtonians pay sales tax to Washington State for purchases in Oregon? The sales and use tax is law, but only big ticket items like cars and boats catch Olympia's scrutiny it seems.

I believe Washingtonians are indeed supposed to pay sales taxes on items they purchase in Oregon. I'm not sure if this is well enforced or not.

Yes. Washington residents are, by law, supposed to report out of state purchases and remit the appropriate use tax. When I worked in government I did so because not doing so was grounds for termination. Now that I work in the private sector and pay Oregon income tax.... my view is different...

I would certainly go for a sales tax with no income tax.
If this were to happen, we'd have to make sure to take it a step further and make sure that no 'political subdivision' can institute an income tax. Multnomah Co. ITAX2, anyone?!

Well now it's getting more complicated upon reading other posts. Not sure what a good solution would be to be honest.

Having kids in public school of course is a huge concern for us and getting it properly funded has been challenging since Measures 5 and 11 passed a few years back.

Thankfully we live in an area where parent involvement is very high both in terms of time commitment and financial support. But not everyone school has that luxury. Even with that stated would a sales tax even help schools in the long run?

I simply don't know.

would a sales tax even help schools in the long run?

My best guess is that the politicians would advertise it a "A huge help to the schools" then, as they did with the lottery monies, just replace the existing general fund money and the schools would be no better off that they are today.

Can you imagine how much more money the schools would have if they had been able to keep their existing funding AND add to that the lottery money, which was how it was advertised, at least in Missouri, when they voted for the lottery.

At the risk of being called a conservative, I have to say I oppose the idea of a sales tax. Sure, they could replace the income tax, but they won't. You've seen the latest proposal, the same old thing. The voters have defeated this idea nine times and won't endorse it now. Plus I do most of my business in Washington, mostly because I have to. I'll lose my exemption if a sales tax comes here.

The voters have spoken since 1968 they don't want a sales tax and income tax. Why is salem so hard of hearing????

The voters have never been able to vote on a sales tax with no income tax. If that was offered, it would pass.

I don't think it would pass if the sales tax rate was 12% to 14% as it would need to be if no income tax were levied. Again, Washington State only gets about half of its revenue from it's sales tax.

And the state sales tax in WA is 6.5%, with local taxes varying on top of that. WA and OR are not in the mainstream on taxation. Most states have a combined income and sales tax.

Washington's system seems to do better than Oregon's. So why not work towards that model?