Skip to main content
CASE NO.: 240642
DATE: Nov. 26, 2024
VENUE: Oregon Tax Court
PLAINTIFF: Multnomah County
DEFENDANTS: Elizabeth Adair and Thomas Rockwell
Want to spice up a boring Dunthorpe dinner party? Come out in favor of the supportive housing services tax collected by Metro, the regional government, and the Preschool for All tax levied by Multnomah County. Both taxes hit high earners, by design, and tend to piss them off.
Metro’s 1% homelessness tax kicks in on any income above $125,000 for individuals and $200,000 for married couples. The county’s pre-K tax collects 1.5% on income over $125,000 for individuals and 3% on income beyond $250,000. For joint filers, the thresholds are $200,000 and $400,000.
A recent court case shows the lengths that the wealthy will go to avoid the taxes—and the effort that Multnomah County and Metro will expend to collect them.
The case is in Oregon Tax Court, and dollar amounts aren’t described in the documents, so we don’t know if the payers are whales or mere sea lions, but all sides seem to agree that the amount is big enough to fight over. A person familiar with the matter says the pre-K payment alone approaches seven figures.
The dispute started when Elizabeth Adair and Thomas Rockwell paid the two taxes in 2021 and 2022, filing state returns for Oregon and California, where they had earned some income. They claimed a credit on their California return for taxes paid to Oregon, then sought refunds for the pre-K and housing services taxes.
Such credits are allowed under a 2015 U.S. Supreme Court opinion, which says denying the credits violates the commerce clause of the U.S. Constitution. The commerce clause, a controversial one (like so many), prevents states from unfairly burdening business done across state lines. States’ rights types hate it because it gives Congress broad regulatory powers.
The city of Portland, which administers taxes for Metro and the county, denied the refunds. Adair and Rockwell turned to the city’s Revenue Division Appeals Board, where they won a reversal in August. They were entitled to their refunds on the local taxes, the board ruled.
But Metro and Multnomah County struck back in November. In separate but almost identical complaints, they appealed the decision in the Magistrate Division of the Oregon Tax Court, calling it “an incorrect conclusion as a matter of law” and asking the tax court to declare Adair and Rockwell’s argument “procedurally and constitutionally invalid.”
In December, Adair and Rockwell petitioned to move the cases up to the Regular Division of the tax court, which handles appeals. Such a move could speed resolution of the case. Given the “importance” of the matter and the “significant amount at issue,” it belongs there, they argued. And without refunds, the Metro and county taxes subject them to “unconstitutional multiple taxation.”
The Regular Division rejected their requests last month.
And that’s where it stands. No court date has been set. Things might have changed had the Supreme Court agreed to take another case on interstate tax, but on Jan. 13, the justices declined to hear it. At the rate they’re going, Adair, Rockwell, Metro and Multnomah County might end up at SCOTUS themselves.