Feb. 1, 2020 — In my recent letter to the editor (“Do You Know About The New Oregon Sales Tax?” Jan. 18), I discussed the new Oregon Sales Tax (HB 3427 or Student Success Act) that is taking people by surprise. The editor made a few comments to further clarify what the new tax is for, who pays it, how much it is and the income tax rate cuts included in the bill.
I would like to add some additional information on a few of the items he mentioned.
The tax is known as the Student Success Act (SSA) and is earmarked for education. What may not be clear is that 25 percent of the tax is going to the State General Fund. In addition, there will be more than 80 new full-time employees added to the Department of Revenue and the State’s Attorney General’s office in order to implement and administer the new tax.
The official reason given for the new tax is to increase funding to schools that was limited by a 1990 ballot measure. In reality, it is back door funding for the Public Employees Retirement System (PERS).
Per-student spending has steadily increased since 1990. Over the last 30 years, ever-increasing percentages of dollars budgeted for schools didn’t make it to the classroom but was instead was sent to Salem to fund PERS.
Even with these increases, the funding couldn’t keep up with the promises made by the State to public employees. As of September 2019, PERS was $27 billion under water. Oregon is the fourth biggest per capita spending state in the country so it is not a lack of money it’s how it is the spent.
The new tax is like a pyramid scheme. It is assessed at every level of production or delivery of service but it’s not really going to be paid by the assessed businesses — it’s going to be paid by us, the consumer.
Here’s why. In its first full year the tax is in place, the State expects to collect $799,000,000 from taxing Oregon sales transactions. Businesses have no choice but to pass some or all of their additional tax cost on to their customers (That’s us, the consumer.)
There is an income tax rate reduction in the new law of .25 percent on each tax bracket so we do get some help. For example: If you pay Oregon tax on $50,000 of income, the rate reduction would save you $125.
In 2020, the tax net increase is projected to be $587,000,000 or $440 per Oregon household. The Legislative Revenue Office projects the net tax increase will be $1,153,000,000 by 2023 — or $864 per household.
The 2019 legislative session enacted the business sales tax, family leave, payroll tax, healthcare tax, reduced the kicker refund and increased alcohol licensing tax for a grand total of $2,851,000,000 — or $2,318 per Oregon household.
That’s why I asked the question in my earlier letter about “What part of Mars are they from?”
Either they don’t care about the effect of these tax increases on regular citizens, or their economic situation so much better than ours that don’t see it as a problem.