Should a family living below the poverty level have to pay state income tax? Most states say no – but Oregon says yes.
According to a report released yesterday by the Washington-based Center on Budget and Policy Priorities, the income tax in this state for a family of four kicks in at $19,800. That’s $2,180 below the federal poverty line for a family of that size.
“A two-parent family of four living at the poverty line with just $21,947 in income had to pay $200 in Oregon income taxes in 2009, the fifth-highest amount among states for a family of four at that income level,” a news release from the Oregon Center for Public Policy said. A “nearly poor” family of the same size with an annual income of 125% of the poverty level – $27,434 – would owe $764, the fourth-highest amount in the nation.
Those amounts might not seem huge, but for a low-income family they could mean the difference between paying the rent or being evicted, or between paying the utility bill and having the power turned off.
Only 13 of the 50 states levy income taxes on families living at the poverty level, the OCPP said. Nine Eight states have no personal income tax.
“The bottom line,” said Joy Margheim, an analyst for the OCPP, “is that Oregon not only sets the level for having to start paying income taxes much lower than most other states, but it also imposes one of the heftier income tax bills on low-income families once they rise above that income level.”
Margheim said the report underlines the need for a “robust improvement” in Oregon’s Earned Income Tax Credit, a refundable income tax credit for low-income people who work: “A boost to the state’s EITC is the most efficient and targeted way for Oregon to raise the income tax threshold and end the practice of taxing the work effort of working poor families.”
A coalition called Oregonians for Working Families, including more than 95 health and human service organizations, labor groups, businesses and local governments, plans to “push for a significant increase in the state EITC” next year, the OCPP said.
This article appears in Apr 29 – May 5, 2010.
MAKE LOCAL JOURNALISM HAPPEN
Republish our articles for free, online or in print, under a Creative Commons license.
Exactly how much does that family pay in sales tax in those other states where they would not have to pay income tax? I would suspect considerably higher then the 200 they pay in Oregon income tax. Your comparison to other states is a very weak arguement.
Kudos RHB you’re right on point.
After paying Social Security this family earning $21,947 would have about $20,000 in take home pay. If half of that amount is used for food and rent, then they would likely be paying the following sales taxes: CA – $825; WA – 650; NV – $685; ID – $600. This would be in addition to any income tax, if any, in CA or ID. I am heartened that OR would only be “charging” $200.
BTW Mr. HBM, since we’re talking income taxes, seems that O’Keefe’s handcream company in Sisters is moving to Ohio. To paraphrase her sentiment expressed in the Bulletin, it seems that the company would have likely stayed in OR had it not been for Measure 66/67. Seems that I remember a certain Pro-Every-Tax blogger/bloviator (you) made a $20 bet sometime back payable to anyone who could name a company moving out of OR due to Measure 66/67. I realize you’ll likely dream up some way to weasel out of this but I’m just glad that the twenty or so families affected by this will not be paying sales taxes in OR while they put their family finances back together.
Pssst —- Let me know when I should come by to pick up the $20.
HBM, what does the poverty level family pay in sales taxes in OR. They’re much better off in OR than in WA, CA, ID, or NV. CA’s sales tax is over 8% and they would pay about $800 in sales taxes there after deducting for non-taxable items such as food and rent. This would in addition to any income tax they might pay in CA or ID. I’m heartened to see OR is much more accomodating to those in need.
And BTW, HBM, while speaking of income taxes, it seems that the hand cream company in Sisters (O’Keefe) is moving to Ohio. Also seems that its owner made it clear, according to the Bulletin, that it was due to the impacts of Measure 66/67. Seems to me I remember a certain Love-Any- and-All-Taxes blogger/bloviator (you) made a bet some time ago to pay anyone $20 who can cite an Oregon company that is moving out of state because of 66/67. Now I realize that you’ll try to weasel out of this somehow. But I’m happy that the 20 or so Sisters families affected will not have to worry about regressive sales taxes while they put their financial houses back in order.
Pssst —— when should I come by to pick up my $20.
Oregon’s highly regressive tax structure is lamentable, to be sure.
On the other hand, there is, I think, something to be said for everyone who earns income — no matter how little — sharing part of the burden. This isn’t the case with federal income tax, where more than a third of filers pay nothing at all (or less than zero, if you account for EIC), and that’s part of what could make it darn-near-impossible to shrink the federal deficit anytime soon.
On the surface, Mr. Miller has a point. What he is forgetting is that other states tax families below the poverty line in the form of a sales tax. I’d like to see how the numbers work when you factor sales tax into the equation….come on do it! I would guess that a family making $20,000 per year pay more than $200 per year in sales tax.
RHB: You make a good point. The sales tax is a very regressive tax, which is why I don’t want to see Oregon adopt one.
To decide how valid the argument about the income tax is, however, you would have to look at other states that have an income tax but no sales tax and see if they require poverty-level folks to pay state income tax. And then local sales taxes (if any) would enter the picture. It could get pretty complicated.
critic–
I read the article in which O’Keefe claimed the tax ‘may’ have had an impact–just as the Bulletin editorial this morning did the same. The buyers made no such claim–in fact, is anyone surprised that they are doing the same thing Cessna did here in Bend. Consolidate manufacuring to reduce costs? This is how it works in business–buy a product/company/manufacturer and eliminate any redundency as a first priority. How much will they save by eliminating a remote manufacturing operation–the management oversite and required shipping network, etc., and moving it to where all of these things already exist? If it satisfies you agenda they way the claim apparrently satisfies that of O’Keefe and the Bulletin’s editorial board, have at it. My hat is off to O’Keefe–she did what we all dream of and sometimes accomplish. But go back and read her comments carefully–then read some basic business management texts. Scale has its advantages.
Whatever floats your boat, though…
Cramer: Thanks for making the point I wanted to make but didn’t get around to. O’Keefe in the Bulletin story seemed to be SPECULATING that the tax increases might have been A factor in the decision to move manufacturing to Ohio. That’s very far from KNOWING that the tax increases were THE factor. As you point out, it’s very common for a company that buys out another one to move the acquired firm’s operations to its home turf.
Of course we both know that whenever a business moves out of Oregon from now until the end of time, right-wingers are going to claim it was Measures 66 and 67 that did it (and are going to ignore all the businesses that move TO Oregon).
I was right, HBM. You weaseled out. And Cramer, lighten up, drink some decaf. We’re here to tweak HBM when he deserves it, which is quite often.
Here’s what The Bulletin story actually said re the purchaser of Tara O’Keefe’s company moving it to Ohio:
“Keeping the manufacturing in Central Oregon would have been possible for these buyers, or others who were interested in O’Keeffe’s products, [O’Keefe] said, if not for the tax impact of the recently passed Measures 66 and 67. Measure 66 raised the personal income tax on joint filers with taxable income of at least $250,000 and single filers with taxable income of at least $125,000, while 67 raised corporate taxes.
“‘The business climate in Oregon just does not provide an incentive for people to move businesses to Oregon,’ she said. ‘Quite the opposite.'”
It sounds pretty speculative to me; she says it “would have been possible” to keep the operation here, but that’s not the same thing as saying they would have done it. It also sounds like O’Keefe has a political axe to grind and is using this occasion to grind it.
If you can come up with a statement from an executive of Gorilla Glue, the purchasing company, to the effect that they decided to move the Working Hands operations to Ohio because of Oregon Measures 66 and 67, I’ll pay up. I don’t want to “weasel out,” but I don’t intend to give money away on the basis of somebody’s speculative — and politically biased — opinion.
‘We’re here to tweak HBM when he deserves it, which is quite often.’
Actually, some of us are hwere to participate in rational dialogue and debate. I tweak those I choose when I feel it needed.
I wondered what would Mrs O’keffe might gain in making this comment about 66/67?
Now I am only assuming based on one bit of evidence that based on her donations she supported the group against 66/67 and may of been bitter about that loss.
Ms. Tara O’Keeffe-Broadbent (O’keeffe’s Company/President), (Zip code: 97759) $250 to NATIONAL REPUBLICAN CONGRESSIONAL COMMITTEE on 03/03/05
Read more: http://www.city-data.com/elec2/elec-SISTERS-OR.html#ixzz0nmbWwps7
and apparently she had no problem using products made in China to package her products rather than supporting the good ole USofA.
http://www.packworld.com/package-19668