In November, Oregon voters will vote on Initiative 3, which would allow taxpayers full deduction of federal income taxes on Oregon state income tax returns. Currently, the deduction is limited to about $5,500. Petitioners gathered some 82,000 signatures to qualify the initiative for the ballot.
Before 1974, Oregon taxpayers could fully deduct federal income taxes on their state taxes, but that year a $3,000 limit was instituted (which would be about $13,000 in 2008 dollars). In 1980, the amount was increased to $7,000 ($18,000 in 2008 dollars), but reduced to $3,000 in 1987, and increased to $5,000 in 2000 with annual inflation adjustments. Also in 2000, voters rejected a measure 45% to 55% that also would have made federal income taxes fully deductible. (See today's Daily Tax Report article by Tom Alkire for this history.)
The Legislative Revenue Office says that the measure would reduce state general fund revenue by 13 percent, or about $550 million. Read the text of the initiative here (PDF).
More on Oregon here. Past Oregon blog posts:
- Helping Two-Legs Good, Helping Four-Legs Bad, by Joseph Henchman, January 7, 2008
- A Merrier Christmas in Oregon, by Joseph Henchman, December 25, 2007
- News Roundup: Search Federal Spending, AMT Vote, Tax Swaps, Beer Tax, by Joseph Henchman, December 14, 2007
- Oregon Corporate Tax Disclosure Headed to Ballot?, by Chris Atkins, May 31, 2006
Residents of Chicago are likely to notice that goods and services cost a bit more starting yesterday. On that day, Chicago assumed the highest metropolitan sales tax rate in the nation. The new 10.25 percent rate in Cook County, approved earlier this year, was accelerated to close a budget deficit.
Additionally, dining within a special business taxing district in the heart of the city will include a sales tax bill of 11.25 percent. So, if a couple spends $100 on a romantic meal, taxes alone will be $11.25. Imagine what it would be on a big ticket item like a television or a car. Speculation that consumers will instead shop in surrounding suburbs where tax rates are much lower has already begun (see our take on it earlier this year).
Congrats go out to Chicago; they are no longer the second city when it comes to municipal tax rates.
Earlier posts on the steadily increasing Chicago sales tax rate here, here, and here.
Seattle's proposed "fee" on each plastic bag (actually an excise tax, since 15 of the 20 cents is to be used for general government spending) is catching some heat for different reasons. On one hand, retailers argue that it is not neutral, since the fee only applies to grocery bags and not to other retailers who give plastic bags to customers:
"If you're going to try to change behavior, everyone should be involved," said Holly Chisa of the Northwest Grocery Association, a group of larger stores.
From the other direction is criticism that the bag fee amounts to a regressive tax on food:
"There's a reason we don't have sales tax on food," said Councilman Richard McIver. "Putting a tax on the bag -- or the container I put the food into to get the food home -- seems oxymoronic."
McIver asked officials who answer to Nickels if the mayor had considered exempting food stamp customers from the fee. The mayor does not support such a move, said Dick Lilly, an analyst with Seattle Public Utilities. Nickels feels that would create a disincentive for some customers to reduce their waste, Lilly said. In addition, the mayor hopes to provide at least one free reusable a Seattle household, he has said.
More on Pigouvian taxes (taxes used to change behavior) here.
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