Multnomah County Democrats, who have probably never found a tax they didn’t like, are supporting a new capital gains tax on county residents, further burdening an already overtaxed populace.
People who take the time to read their voters pamphlet for the May 16, 2022 election will see Multnomah County Ballot Measure 26-238, “Eviction Representation for All”. The measure would create a program that would provide “free, culturally specific and responsive legal representation, with translation, to persons sued in Multnomah County residential proceedings (including post foreclosure) as well as related housing claims and appeals, including to maintain public housing assistance.”
The program would be funded by a new, adjustable 0.75 % tax on net capital gains of county residents. The tax rate could be increased or decreased based on the county’s annual reports.
In other words, the new tax revenue would pay for lawyers to help people fight with property owners.
Minimizing evictions may be a worthy goal, but not every social problem should generate a new tax on already burdened taxpayers. A realignment of priorities would be preferable
Without a doubt, this measure is a disaster in the making.
Although advocates argue the measure would only tax individuals, not businesses, that’s a fiction. As a study done by Perkins & Co for the Portland Business Alliance concluded, “Businesses organized as pass-through entities such as a sole proprietorship, partnership, limited liability company (except those electing to be taxed as a C corporation), and S corporation are taxed at the individual level. The majority of Multnomah County small business owners reflect the annual activity of their businesses on their individual income tax returns.”
Someone selling their business in Multnomah County would also have to pay the capital gains tax with no other investments to offset any gains.
The Perkins & Co report also noted that “taxpayers would be subject to this tax even if they were otherwise nontaxable for federal, Oregon, and other local tax purposes. “ For example, retirees withdrawing from their retirement investment accounts might not be subject to federal or Oregon income taxes, but they might have to pay could pay have to pay Multnomah County’s capital gains tax on their savings , reducing their retirement income if their withdrawals are categorized as capital gains.
Equally disturbing, Perkins & Co. concluded that homeowners selling their residence at a profit would owe the proposed local capital gains tax on all gains from the sale.
The Cascade Policy Institute has rightly pointed out another flow in the measure — the 0.75 % tax rate is adjustable. “Most of us have been around long enough to know that when a tax rate is adjustable, the only way is up,” Cascade says.
Resident small business owners in Multnomah County already face a barrage of taxes, resulting in the second highest marginal individual income tax rate in the United States after New York City, and has suffered population losses in each of the past two years. Piling on with yet another poorly designed tax would compound the county’s problems.