The only way to stop these new tax breaks is for the Oregon legislature to vote to reject them - to “disconnect” from them. This is because Oregon connects to federal tax law definitions. Whenever Congress creates new tax breaks, Oregon often ends up copying them automatically, without Oregon lawmakers having ever voted to approve them. Oregon tax breaks often get written in Washington, D.C. In other words, a minority of lawmakers - more easily captured by special interests - can block the will of the majority. If you want to create a new tax giveaway for the well-off or a new tax subsidy for corporations, again, a simple majority is enough.īut if you want to raise tax rates on the rich and big corporations to fund schools or other essential services, then you need three-fifths of each chamber of the legislature to agree. If you want to cut taxes in Oregon, a simple majority of the Oregon legislature suffices. When it comes to raising taxes, the minority rules To a large extent, the weakness of the corporate income tax is the result of aggressive tax avoidance by corporations: the artificial shifting of corporate profits abroad and the relentless lobbying for new tax breaks. This relative decline of the corporate income tax has occurred despite an environment of strong corporate profits. In the last budget period, corporations paid about 7 percent. In the mid-1970s, corporations contributed almost 19 percent of all income taxes collected by the state of Oregon. The corporate income tax has weakened, despite strong corporate profits As a result of the legislature’s decision, some rich business owners are paying not just lower tax rates than others who make the same amount of money, but often lower tax rates than their own employees. Instead, the owners pay personal income taxes on the profits of the business. These pass-through businesses don’t pay corporate income taxes. In 2013, the Oregon legislature blew up a bedrock principle of tax fairness when it established lower tax rates for some owners of “pass-through” businesses, such as S-corporations and partnerships. Some rich business owners are paying a lower tax rate than their employees When you add up all state and local taxes, Oregon’s tax structure is actually regressive – meaning low-income Oregonians pay a higher share of their income in taxes than the richest Oregonians. They include property taxes and excise taxes on things like gasoline, alcohol, and tobacco. While the personal income tax is based on a taxpayer’s ability to pay, Oregonians pay other taxes not connected to how much someone can afford to pay. When you consider not just income taxes, but all the taxes collected by state and local governments, the tax structure turns upside-down. This means a lower-income family with just $20,000 of taxable income pays the same tax rate on its last dollar of income as a family making a quarter-million dollars. That rate stays in place until a couple reaches $250,000 of taxable income. For couples filing taxes together, the 8.75 percent tax rate kicks in at $18,400 of taxable income (what you’re left with after all tax subtractions and deductions, but before tax credits). The thing to note is that it doesn’t take much income to get to the next-to-highest tax bracket of 8.75 percent. Marginal tax rates start at 4.75 percent and, as a taxpayer’s income goes up, rates quickly rise to 6.75 percent and 8.75 percent, topping out at 9.9 percent. Oregon’s personal income tax is progressive, but mildly so. Oregon’s personal income tax is mildly progressive the entire tax system is notįrom Jesus to Adam Smith, there is wide agreement that a fair tax system is one based on the ability to pay - one that asks proportionately more of a rich person than of a poor person. More than 90 percent of the state budget goes to three key areas: education, health and human services, and public safety. It brings in more than four in five dollars that fund what people usually refer to as the “state budget,” the General Fund & Lottery Funds Budget. In Oregon, there is no more consequential tax than the personal income tax - the taxes we pay out of our earnings. Taxes pay to educate our children, to care for our seniors, and for many other services that we alone cannot shoulder. Taxes are essential for our communities to thrive. The tax system pays for the things that matter to Oregonians Here are eight things to know about Oregon’s tax system. With additional time to file your return, you may want to spend a few minutes reflecting on the tax system. Tax Day will arrive a month later than usual this year, another consequence of the COVID-19 pandemic.
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