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Pondering tax reform.

Byline: The Register-Guard

A WHILE BACK, former Oregon Secretary of State Phil Keisling suggested that the Legislature be made nonpartisan. Now, Keisling is back with another idea: a tax reform plan that would not only alter Oregon's system of public finance, but lighten Oregonians' tax burden.

Writing in The Oregonian, Keisling suggested that state tax reform measures have failed in the past because they sought two goals that voters simply won't buy together: tax reform and increased government revenue. Keisling proposed asking voters their view of restructuring the state's tax system along with a reduction in existing taxes.

Specifically, he proposed a 5 percent sales tax whose proceeds would be dedicated to kindergarten through 12th grade education. Keisling wrote that such a proposal should include constitutional guarantees exempting food, medicine, medical services, rent, mortgage payments and utilities from taxation. The money raised by such a tax, he argued, could fully fund local school districts, thus freeing up the huge amount of state income tax revenue that now goes to support education.

Along with the sales tax, Keisling would ask voters to require that personal income taxes and local property taxes be reduced by an amount equal to 105 percent to 110 percent of the sales tax revenues. The difference, Keisling argued, would be made up by tourists, who would pay an estimated $300 million for Oregon schools. With money from a sales tax, the state could afford to reduce its top income tax rate (now at 9 percent) to 5 percent, exempt incomes below $20,000 from taxation, eliminate capital gains taxes to spur investment in Oregon companies, and roll back local property taxes.

Overall, Keisling concluded, such a tax reform package could stabilize key public services, especially education, and help promote the growth of Oregon's economy.

Keisling is well aware of the nine times that Oregon voters have rejected sales tax proposals. The best that any such proposal fared at the polls was to lose by a margin of 3 to 1. Most of the time, they've lost 7-to-1 or worse. And the odds of the voters changing their view are indeed long.

But given the uncertainties surrounding state funding of education and Oregonians' recognition that public schools are essential, Keisling argued that maybe, just maybe, voters would buy off on a sales tax dedicated to education - especially if it's accompanied by a larger cut in other taxes.

Such a plan might actually have a chance. At the very least, the 2003 Legislature should consider it. There are already sales tax proposals floating around the Legislature, and Keisling's ideas should resonate in some quarters. If agreement can be found in both chambers, the voters should be asked their opinion.

Yes, a sales tax may never be enacted in this state - in large part because voters are suspicious that the new tax would increase their total tax burden. If a proposal could be crafted to credibly counter that suspicion, and respond positively to the public's understanding of the need for adequately funded schools, maybe the voters' answer would be different.
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Article Details
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Title Annotation:A sales tax for schools, and cuts in other taxes; Editorials
Publication:The Register-Guard (Eugene, OR)
Article Type:Editorial
Geographic Code:1U9OR
Date:Feb 20, 2003
Next Article:Clear channels.

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