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This page contains a single entry from the blog posted on September 29, 2008 9:35 AM. The previous post in this blog was Another trip to the well. The next post in this blog is Consumer alert. Many more can be found on the main index page or by looking through the archives.

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Monday, September 29, 2008

It isn't all bad

This isn't a balanced headline.

Measure 59, yet another attempt to make all federal income taxes deductible on one's Oregon income tax returns, would indeed benefit high-income taxpayers disproportionately. But there's a principle behind it that makes a lot of sense: You can't pay taxes to the state out of the money taken from you by the federal government. Failure to allow full deductibility amounts to a state tax on a federal tax, and at the moment that double tax is being paid only by the relatively rich.

Now, I'm not saying that there wouldn't be serious effects on the state budget if the measure passes without some other source of revenue being identified to replace the lost revenue. But news coverage ought to give the merits of the initiative a fair statement.

Comments (16)

It's also really cute that today's editorial urges a "no" vote on the same measure. I'm sure the editorial board will tell you that their in-depth reporting informed their editorial. Uh-huh.

[Off topic: It was also really cute that they made a "news" story yesterday out of the promotional DVD inserted in the paper.]

Yep, headlines like that are why the Oregonian is considered a joke.

Why not a headline that said something about fairness of double taxation? Instead, the slime who work as editors at the O tried to make the headline as negative as possible by using the words bailout and rich.

The editors at the O are so biased they don't even know they are biased. It is an echo chamber down there and they only talk to themselves. If one of the editors would come on here and defend that headline they would most likely say it is an accurate headline and is unbiased. That is because they can't even see outside of their own worldview.

My own view on the subject is that there is a good argument to be made for getting rid of the double taxation. Sure it means less money for the state but what is so fair about taxing money that isn't really income? If you've paid 30 points to Uncle Sam then you don't have that money anymore so why do you have to pay taxes on it?

No, I don't have a solution for the money that Salem will miss but that can be sorted out by adjusting the rates or other tweaks.

Hey when you get your talking points from the union, what do you expect? I mean there are about 400K PERS accounts in Oregon and you can guess how those will vote.

Yes, I know it is Sizemore, but at least be somewhat fair. Paying taxes on taxes seems somewhat unfair.

The other ballot measure to allow secret voting has also been twisted to the poitn where it will cause deaths from insufficent firefighters and closing schools.

You can't pay taxes to the state out of the money taken from you by the federal government.

No, but you can pay them out of the pittance the federal government has suffered you to keep (which includes, at least for some itemizers, the federal tax that would have been owed on income that goes to pay state income taxes). The worst of the "taxes on taxes" is the social security and medicare withholding tax, which comes right off the top, without reducing taxable income for either federal or state income tax calculations (except for the "employer" portion), and hits lower incomes the hardest.

I don’t get this double taxation stuff. The state tax is only linked to the 1040 for ease of filling out a tax form. The state does not have to link their taxes to anything, not make anything deductible either. The state can do what ever the legislature desires, or what people vote for in referendums. Don’t believe for a minute that if this passes the legislature won’t adopt new tax rates to make this mute.

"I don’t get this double taxation stuff. The state tax is only linked to the 1040 for ease of filling out a tax form. The state does not have to link their taxes to anything, not make anything deductible either."

In Oregon, you are only allowed to deduct up to $3500 in Fed taxes from your Oregon income. If you pay $10,000 in Fed Taxes, then you have to pay 9% of $6,500 you already paid to the Fed tax again to Oregon tax. Thus a double taxation.

Allen L: The worst of the "taxes on taxes" is the social security and medicare withholding tax, which comes right off the top, without reducing taxable income for either federal or state income tax calculations (except for the "employer" portion), and hits lower incomes the hardest.

I tried that argument here once, and got it shot down pretty quickly by Prof. B. Turns out that the earned income tax credit evens things out for lower income workers.

andy: No, I don't have a solution for the money that Salem will miss but that can be sorted out by adjusting the rates or other tweaks

A rate adjustment would indeed likely be the outcome. But note that if history is a guide, adjusting the rates would likely be done in a way that would add higher rates that kicked in at a relatively low income level, and wouldn't be indexed to inflation. Thus, given time, the middle class would again be hit pretty hard by the changes - the exact opposite effect of what the O article apparently intended.

I was shocked that the Marxists down at the O failed to point out in that column that high income Oregonians pay most of the income taxes collected by the State. Wouldn't that be a fair thing to report on in a column about a ballot measure that would change taxes???

Or do they fail to mention anything for fear that the election won't turn out the way they want it?

I guess at some point it becomes obvious that the editors at the O aren't journalists, they are active participants in the political process. They are working hard to get only their message out rather than reporting the facts.

Hey John, isn't there a dual channel TDR circuit that you should be tweaking on rather than hanging out on bojack?

Bill Sizemore doesn't give a rat's a$$ about "double taxation". What people like Sizemore, Grover Norquist and their ideological fellow travelers want to do is abolish the bits of government that do not involve manacles and high explosives. This is not exactly a mystery after 30 years of them broadcasting their intentions.

Bill Sizemore doesn't give a rat's a$$ about "double taxation".

Nor could I give one about what Bill Sizemore intends. It's bad enough we're choosing political leaders based on soundbites. Now we're deciding ballot measures based on who introduced them? What poor decision-making!

What poor decision-making!

One could do worse than voting "no" on anything authored by Sizemore -- or, for that matter, on any initiative at all.

"This isn't a balanced headline"

No but it did go well with the anti-M59 editorial in the same issue.

Coincidence or Convenience?

Nor could I give one about what Bill Sizemore intends. It's bad enough we're choosing political leaders based on soundbites. Now we're deciding ballot measures based on who introduced them? What poor decision-making!

I agree 100%. We should judge the measures based on their own merits. People do change, you know ;)

Andy: I certainly don't consider The Oregonian a joke. Indeed, their article on this issue provided a lot of information. Which is a lot more than I can say about your response.

At the most superficial level, this measure seems like a good idea, on the principle that double taxation is undesirable. But the article correctly points out that it could potentially drain almost $1 billion dollars from the state budget (which is the reason I voted against it the last time it was on the ballot).

Your comment that "this could be made up by other tweaks" is ridiculous. Which tweaks do you suggest to make up the huge budget shortfall? Sales tax? Property tax? Ad valorem tax? Cell phone tax?

The only practical solution would be to raise the income tax rate, which would cause poor people to pay even more taxes. You could then raise the standard deduction, but now you've shifted the burden onto the middle class.

Speaking of "double taxations", this happens to corporations all the time. I don't see anybody clamoring to get rid of that...

Another tax that we get double taxed on is social security tax. I don't see anybody on this thread clamoring to get rid of that, and at 7.5 percent of your salary, that would be a pretty significant deduction...

Always vote "no" on all Sizemore initiatives!! I can guarantee that the vast majority of people will not benefit from them!

The only practical solution would be to raise the income tax rate, which would cause poor people to pay even more taxes.

Not true. They could do what Obama's proposing to do -- raise marginal rates on only the highest-income taxpayers.

Another tax that we get double taxed on is social security tax.

No kidding. Give me a ballot measure on that one, too!

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