Portland Approves Free Universal Preschool With Nation's Highest Taxes

Portland voters approved a measure on Election Day that would provide “free” universal preschool. In doing so, they approved new taxes (supposedly on high-earners) that give Portland residents the highest taxes in the nation.

So says a report prepared for Oregon Business and Industry:

But the taxes add up. Oregon Business & Industry, which represents the state’s largest employers, wanted to know what the cumulative effect of them would be.

The short answer: If Multnomah County’s Preschool for All measure passes, county residents who make more than $250,000 a year will pay the highest personal income taxes in the nation.

That’s the finding of a study OBI released today. The organization hired Ernst & Young to do the analysis for the State Tax Research Institute. (The homeless services measure that passed earlier this year will add 1%; the preschool measure will add up to 3% to Oregon’s top personal rate of 9.9% (1.5% for people who make over $125,000 and another 1.5% for those who make above $250,00).

(Note: OBI says the .7 percent included in the local rate is the employer-paid TriMet payroll tax.)

Oregon has historically had very low taxes on business, but the property taxes (parks, schools, libraries) and payroll tax (Metro transportation measure) on the November ballot would add to a slew of other new taxes in the past couple of years to increase the combined tax rate on businesses from 40th in the nation to 19th. The total tax burden on businesses would increase 40% from the beginning of 2019 to the end of 2021, if all measures pass.

It would also vault Oregon ahead of California and Idaho in terms of total corporate tax bite, Ernst & Young found.

“In our 18 years of producing an annual analysis of state and local business tax burdens across the country, we’ve never seen a state jump so far and so fast in our rankings,” said Doug Lindholm of the State Tax Research Institute. “Unprecedented state and local tax increases have shifted Oregon from a modest business tax burden state to a high business tax state above the national average and higher than Idaho, Washington and California.”

The Taxpayer Association of Oregon noted, “Oregon already leads the nation with a top 9.9% income tax rate and adding 3.8% would make Oregon among the highest top income tax rate states in America.”

Don’t worry, it’s only on the stinking rich who pay the top rate. The rest of the schlubs, who make less than $250,000, only pay the second-highest rate in America—on average, two one-hundredths of a percentage point less than California. So Portland has that going for it.

The Taxpayers Association further noted problems with the idea of “free” universal preschool in Portland, saying, “Having one of the nation’s highest income taxes will cause higher-income taxpayers to leave while migration of out-of-area people arrive to take advantage of the free program, driving up costs.”

Jeff Reynolds is the author of the book, “Behind the Curtain: Inside the Network of Progressive Billionaires and Their Campaign to Undermine Democracy,” available at www.WhoOwnsTheDems.com. Jeff hosts a podcast at anchor.fm/BehindTheCurtain. You can follow him on Twitter @ChargerJeff, and on Parler at @RealJeffReynolds.