Business leaders: Payroll tax better for homeless services
Officials with the Portland Business Alliance have come out against a progressive personal income tax to fund regional homeless services.
Instead, they are proposing a progressive regional payroll tax to raise $250 million a year for 10 years.
Metro is rapidly moving to place an income tax measure on the May 19 primary election ballot. The elected regional government is considering a 1% tax on the incomes of individuals above $125,000 and couples above $250,000 a year.
Metro has yet to say exactly how much money such a tax would raise, but it should be around $250 million or more a year. The Here Together advocacy organization has requested a measure to raise $300 million a year.
The Metro Council will hold a work session on the proposal on Tuesday, Feb. 18, and could refer such a measure to the ballot on Thursday, Feb. 20.
But on Sunday, Feb. 16, two alliance officials sent a letter to the council opposing the creation of such a regional personal income tax. It was signed by Board Chair Vanessa Sturgeon and President & CEO Andrew Hoan. The alliance is greater Portland's Chamber of Commerce and represents the largest, most diverse group of businesses in the region.
The letter says the alliance realizes that additional revenue must be raised to address the homeless crisis, and suggests a payroll tax could win its support.
"The Alliance board has not formally adopted an endorsement for the homelessness services measure proposed by Here Together, but with these changes to the funding mechanism, this measure could earn our endorsement. We hope you'll take our recommendations into consideration in crafting a resilient revenue mechanism," Sturgeon and Hoan wrote.
The letter listed seven reasons for opposing a personal income tax, including, "Oregon is already a very high income tax state, especially relative to Washington, which has no income tax."
The letter included a 2015 study by the Portland-based ECONorthwest consultant firm that said wealthier individual could move to Washington to avoid paying higher income taxes.
"Economic theory would suggest that households would respond to the financial incentives created by the differences in tax rates in Oregon and Washington," the study said.
Instead, the letter presented six reasons why a progressive payroll tax on businesses in the region is a better idea, including, "A payroll tax is vastly more resilient in bad economic times."
Metro is already considering including a payroll tax in the regional transportation funding measure it is planning to put on the Nov. 3 general election ballot. The alliance letter supports payroll taxes for both purposes — $250 million a year for homeless services and $300 million a year for transportation funding.
"Central to our proposal is that the right policy should be resilient, progressive, and not jeopardize the fiscal viability of homeless services in the business cycles when the need for service will be the highest," reads the letter.
The homeless services measure has been requested by the HereTogether advocacy organization. The alliance has been working with them on the proposal for two years, the letter says.
"We believe that the homelessness crisis is a regional issue, and deserves a regional response. This is why we are fully supportive of Metro being the government entity that will collect and distribute the revenue, and hold accountable those who will deliver these desperately needed services to the unsheltered," the letter reads.
You can read the letter here.
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