Portland: Millionaires Pay Same Tax as Low-Income

UPDATE: The City Club of Portland has removed their Arts Tax study from their site. Here's a link to find it.

Portland has become the super-flat tax capital of the region--maybe even the country.

Portland has passed a measure 26-146 (Multnomah County vote tally shows a whopping 60% approval rate) that charges the same tax ($35 per income earner) whether the income earned is bare minimum or millions of dollars. None of this same percentage stuff. The exact same amount.

It is probably not because the area, though voting strongly for President Obama, does not share the Obama enthusiasm for the rich paying their "fair share". Rather it is due to knee-jerk, unthinking voting. It is for the arts and a tax. So, it must be good. Portland voters did not even think about the extremely regressive nature of this tax. Which begs the question of how much thought goes into the area's voting on any issue.

Measure 26-146:

. . . would assess an annual income tax of $35 on all income-earning Portland residents ages 18 and older unless they live in a household making less than the federal poverty level. The money would be used to hire arts and music teachers in public schools serving K-5 students in six Portland school districts. Money also would provide grants to nonprofit arts organizations, other nonprofits and schools to provide arts access to K-12 students, and to make arts and culture available to underserved communities. The tax, expected to raise $12 million a year, would begin with the 2012 tax year.

The City Club did a study of the measure. The majority report favored passage even after explaining how regressive and burdensome the tax would be "on many low-income families."

The tax is imposed on any income-earning adult above the federal poverty level. Using this poverty level sets a low threshold for tax liability. For example, a family of four with annual household income of $25,000 would most likely be required to pay $70 in tax. A single person earning $12,000 would be required to pay $35. We believe a $35 tax is not overly burdensome for a majority of prospective taxpayers; however, your committee believes that it will be a burden on many low-income families. [emphasis added]

The majority further saw the double whammy even if one adult in the household was "non-working".

The actual amount of the tax in this scenario would depend on how many adult income earners there are in the household. However, even a non-working adult is likely to be an income earner, since any amount of income qualifies, thus a minimal amount from casual employment, gifts, or interest on a joint savings account, would qualify an adult resident as “income earning” for purposes of the tax. Therefore, it is likely that most above-poverty households with two adult residents would pay $70, even if one of the adults is not employed full time. [emphasis added]

The minority report, which opposed passage of the measure, noted that even the Internal Revenue Service does not use "coercive collection actions" on individuals earning less than $29,000 or families earning less than $55,000. But, Portland voters are okay with sending a private collection agency after individuals earning less than $11,200 and families earning less than $23,100 (the Federal Poverty Guideline threshold).

Further, everyone earning under that amount will have to file annual proof of income to avoid collection agency visits. Having to file proof of income every year should be fun for those living under poverty level. But, they are probably sitting around eating chocolates and reading True Confessions anyway, so what is a little extra time and paperwork to them?

What are Portland voters thinking? It seems not much is going on in those pretty little heads. Certainly nothing to do with easing the life of low-income families or the unemployed in the city.

Let the poor eat cake. We want publicly funded art access, and we want it now.