Measure 59: State Taxes

[October 15th, 2008]
What’s the fuss: Oregonians pay state taxes on some money already paid in federal taxes.

What’s the fix: A total deduction of taxes already paid to the feds.

Here’s the deal: This measure is a tax cut for upper-income taxpayers wrapped in an enticing, if confusing package.

Written by longtime anti-tax activist Bill Sizemore, the measure is similar to one voters rejected in 2000. We said it was a lousy idea then. And we still think that.

The concept is this: The feds get first dibs on tax money. So if you make $50,000, and pay 25 percent to the feds, that’s $12,500 that you cannot spend. But you can only deduct the first $5,600 of that $12,500 on your Oregon state taxes. The rest gets taxed again in Oregon.

Proponents of Measure 59 call it “double taxation,” although the same system exists in most states. This measure would make federal taxes fully deductible on your Oregon state taxes. If the measure passes, it would cost the state $1.2 billion annually when fully implemented.

Considering the state’s annual budget is about $7.5 billion, that cost amounts to about a 15 percent across-the-board cut from education, public safety and other basic services that pays for a tax cut that analysts say would benefit only the top 25 percent of earners—in other words, Sizemore wants to gut services to cut taxes for the rich.