An inartful arts tax.
Byline: The Register-Guard
Every now and then a city council or county commission will do all other local governments a favor by putting its foot in a trap to see whether it springs shut. The Portland City Council conducted such an experiment in 2012 by getting voters to approve a yearly tax of $35 on every income-earning resident to support arts programs in public schools and elsewhere. Last week, the Oregon Court of Appeals ruled that the tax is constitutional, providing both guidance and caution to other jurisdictions that may consider a special-purpose flat tax.
Opponents challenged the tax on the basis that it constitutes a "poll or head tax" - a tax paid by everyone at a uniform rate, regardless of ability to pay. Oregon voters approved an initiative measure prohibiting such taxes in 1910, partly to protest a $3-per-capita tax to pay for roads. But the appeals court found that the arts tax can't be described as a poll or head tax, because many Portlanders are exempt from it.
As approved by the voters, the arts tax had few exemptions. That was part of its appeal: The tax would be paid by nearly everyone, allowing a low rate to raise a lot of money for a purpose that advances both education and the city's quality of life. As approved by the voters, the tax was to be paid by every Portlander aged 18 or older in a household with income above the federal poverty level.
But problems soon arose. Some people in households above the poverty line have very low incomes - a child or a spouse, for instance, may make a few hundred dollars a year from a part-time job. The $35-a-year arts tax would take a large percentage of such people's income. So the Portland City Council set the income threshold at $1,000 per year. In addition, as a result of past court decisions, cities and states are prohibited from taxing certain types of income, including income from state and federal pension programs.
As a result of these exemptions, the court said that the uniformity that characterizes poll or head taxes does not exist. A dependent college student with pet-sitting income of $1,200 a year must pay the arts tax. A person with a Public Employees Retirement System pension of $75,000 a year, but less than $1,000 a year from other sources, is exempt.
The message to other local governments in Oregon is that a universal flat tax can survive a legal challenge if it is not truly universal, and therefore not truly flat. A tax such as Portland's arts tax is legal, but only if the concept at its heart - everyone pays the same small amount - is compromised.
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|Publication:||The Register-Guard (Eugene, OR)|
|Date:||Jun 14, 2016|
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