Portland area income taxes on high-earners could soar to highest in nation, study finds

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If a host of ballot measures on new taxes succeed this fall, high-earning Portland workers could pay the highest income taxes in America, a new study finds.

This year’s November ballot has four tax measures for Portland and Multnomah County voters to consider: a $4 billion transportation measure, a $387 million Multnomah County Library bond, a $239 million park operating levy, and a $133 million countywide free preschool measure.

Those measures follow metro housing and homeless services bonds passed last year which proponents say are desperately needed.

A new study by Ernst & Young commissioned by the Oregon Business & Industry group found those taxes will add up for the city’s highest-earners.

If approved by voters, the aforementioned tax measures would increase the combined tax burden on businesses by 40% around the end of 2021. That would move Oregon’s business tax rate from the 40th highest in the nation to 19th highest, the study found.

Portland area residents taking in more than $125,000 per year will see the highest tax hikes.

Multnomah County’s Preschool For All measure would add another 3% to Oregon’s top individual rate of 9.9%. That is on top of a homeless services measure approved earlier this year which adds another 1%.

Those taxes would place Oregon well ahead of even California and Idaho for total business taxes, Ernst & Young found.

Oregon’s tax burdens have changed quickly in recent years.

Another study from the accounting firm commissioned by the Council on State Taxation in 2014 found that the state boasted the lowest business tax rate in the country in the 2013 fiscal year.

The study found state and local taxes paid by Oregon businesses amounted to 3.3% of Oregon’s private sector economy in 2013.

The 2020 Ernst & Young study, however, did not provide a value analysis of the public services funded by such tax measures.

An analysis by the Oregon Center for Public Policy this month found the average income of the the state’s wealthiest 0.1% has been climbing.

In 2018, annual income for Oregon’s top taxpayers topped a record $5 million.

“COVID-19 struck with Oregon already in a situation of extreme imbalance, with so much income flowing to the top and too little to the rest,” OCPP analyst Daniel Hauser said. “Extreme inequality has meant that many Oregonians had little or no economic cushion to soften the blow of the economic downturn triggered by the pandemic.”

Oregon Business and Industry President and CEO Sandra McDonough has still argued that more tax increases could drive away big business in the region.

Oregon Business and Industry has endorsed the county’s metro homelessness measure and opposes the metro transportation tax.

Portland’s economy will only face greater challenges amid health restrictions related to the COVID-19 pandemic and ongoing civil unrest.

According to a survey of 718 downtown Portland retailers and restaurants by Downtown Portland Clean & Safe in September, more than 430 businesses were still open.

Another 170 businesses were temporarily closed or operating by online order only. More than 20 businesses had closed shop permanently and 80 more retail locations were left unoccupied.

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