Tax cuts for the poor.
A new report that says Oregon's working poor are being hit harder by state income taxes than families with similar incomes in other states adds impetus to two bills under consideration in the Legislature.
The Center for Budget and Policy Priorities, a national think tank that examines how public policies affect low and moderate-income individuals and families, lists Oregon among the handful of states where the working poor owe at least $200 in state income taxes.
The CBPP analysis found that:
A two-parent family of four with income at the poverty line - $20,615 in 2006 - can expect to pay about $319 in state income taxes, the fifth-highest in the country.
The same size family earning 25 percent more than poverty-level wages, or $25,769, will pay about $832 in state income taxes - the third-highest state income tax for low-income families.
The income tax on a low-income family of three earning 25 percent more than poverty-level wages for the 2006 tax year is $511, also third-highest in the nation.
The CBPP's findings make a strong case for two bills under consideration in the Oregon House of Representatives that would eliminate state income taxes on most poor Oregonians. Both bills ease the tax burden on the poor by increasing Oregon's earned income credit from 5 percent to 12 percent of the federal EIC.
House Bill 3023 offers faster relief, increasing the credit to 12 percent by next year. The other measure, House Bill 2398, phases the increase in over the next five years until it hits 12 percent in 2012.
Tax relief for the working poor through the EIC is one of the most effective ways to provide direct assistance to struggling families. Studies consistently show that the money returned to poor individuals and families through the EIC is spent on sustenance needs such as food, clothing, transportation, child care and housing.
Preliminary estimates by the nonpartisan Legislative Revenue Office predict HB 3023 would reduce state tax collections by $31 million in the 2007-09 biennium and $51 million in the following two-year cycle. The phased approach of HB 2398 would cut state revenues by $19 million in 2007-09.
Reducing tax collections in order to return the money to the individuals and families who need it most is among the simplest and most effective anti-poverty programs a state can adopt. The sooner the money makes it back into the empty wallets of poor Oregonians, the better. The House should pass HB 3023.
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|Title Annotation:||Editorials; Oregon should reduce income tax burden|
|Publication:||The Register-Guard (Eugene, OR)|
|Date:||Mar 31, 2007|
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