Tax plan . . .
(Continued from Page 12)
When the citizens vote on May 1,
they will vote for or against that
$2 constitutional limitation.
Why does the plan call for the $2
to be a constitutional limit?
Because constitutions are not
easily changed. Constitutional
amendments require the vote of
the people. Statutes, on the other
hand, can be changed simply by a
majority vove of any legislature
and a governor's signature. So a
constitutional $2 limit will give
residential property taxpayers
the greatest possible security
that their taxes won’t rise ... a
security very unlike the present
situation.
How will businesses be taxed?
Businesses now pay a business
property tax similiar to the tax
paid by individual residence
owners. Under the McCall plan,
businesses will pay the 27.50
property tax on the “income
producing property” which
contains the business and some—
those making over $15,000 per yer
net profit—will also pay a new
tax, a business profits tax. Those
businesses annually making over
$) 5,000 will be taxed at a one to
two per cent rate of their profits,
the amount depending on the
amount of profit.
The majority of businesses in
Oregon—farms and small
businesses—will not be affected
by this tax. Big business will.
How will corporations be taxed?
Corporations will continue to
pay the corporate excise tax—a
tax now paid annually by cor
porations in Oregon based on the
amount of annual net profits.
The rate of corporate taxation
is currently a flat six per cent of
those profits; under the McCall
plan it will vary from four to ten
per cent, depending on the
amount of net profits made
yearly by a corporation. Again,
those making more will be taxed
at a greater rate.
Will all big corporations pay
more under the McCall plan?
No, unfortunately. A weakness
of the plan is that an estimated 55
of Oregon’s largest corporations
will not pay more. In fact, their
taxes will decrease—at least for
the first year—because most now
pay a greater property tax than
$7.50 per $1000 assessed value of
their land. Weyerhauser, for
example, owns thousands of
acres of timber in Oregon and
pays a high amount of property
tax in several local school
districts. The increase in the
corporate excise tax in the plan is
not nearly enough to offset the
property tax reduction
Weyerhauser will realize.
However, it is estimated that as
the state gradually increases the
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property tax on “income
producing property” to the
maximum $10 per $1000 assessed
value of property allowed by the
c o n s t i t u t i on a 1 limit,
Weyerhauser and other cor
porations’ tax reduction will
reverse and within a few years
those corporations will be paying
as much or more tax than they
now pay.
In conclusion:
The state of Oregon will collect
additional income taxes, state
imposed property taxes on
“income-producing property,” a
business profits tax from large
businesses and more corporate
excise taxes which will be
channeled into the state general
fund.
The general fund, then, will
supply the money to be channeled
from the state to local school
districts to finance up to 95 per
cent of the cost of elementary and
secondary education. The ad
ditional five per cent will come
from the $2 local property tax
(explained above) and from
other sources such as lunch fees,
book rental etc.
How will the money be allocated
from the state general fund?
The formula for allocation,
devised by McCall and his staff,
begins by giving each school
district a basic grant of $900 per
student enrolled in its schools.
The amount of the basic grant
will be determined by calculating
what a district now spends per
student per year, subtracting
“deductible receipts” (such as
fees, lunch revenue, federal
funds for special programs, etc.)
and adding to the resulting figure
a six per cent inflationary
allowance.
Here is how the formula will
work:
Amount spent per student this
year minus deductible receipts
plus six per cent equals the
amount of the basic grant.
What are other major provisions
of the plan?
The plan also calls for full state
funding of existing kindergarten
programs in local districts. And if
voters in other districts approve
the establishment of kin
dergartens, the local districts
will be required to fund 50 per
cent of the kindergaiten
programs for the first year; after
annual rent paid. Some, including
a substantial number of students,
will also qualify for additional
“low-income renter relief.”
Homeowners—will see their
current property taxes decrease
to a maximum of $2 per $1000
assessed value of their property
for school support. They will
receive a tax credit of ten per
cent of additional property taxes
paid to local government,
that the state will assume full
funding of the kindergartens.
The plan provides that
homeowners will receive tax
credits (like the renters’ nine per
cent credit) for 10 per cent of the
remaining county and city im
posed property taxes to further
relieve the over-taxed property
owner.
Realizing that a long road lies
ahead winding to completely
equalized education for all
children in Oregon, the plan
directs the State Board of
Education to search for ways of
achieving equal educational
opportunity in the future.
In conclusion: Here is how the
plan will work for different
Oregon citizens:
Renters—will receive an
automatic nine per cent refund of
Farmers, landlords, business
owners—will pay a state levied
$7.50 per $1000 assessed value of
property tax on “income
producing property.”
All citizens—will pay more
income taxes, the amount
depending on the amount earned.
School districts—will receive
the basic grant money each year
from the state general fund, will
continue elections for tran
sportation and capitol con
struction budgets and will decide
how they want to spend the
money raised from the $2 local
property tax.
All citizens—will continue to
have the opportunity to vote an
transportation and capitol
construction budgets.
Unincorporated businesses—
will pay a one to two per cent
business profits tax if they net
over $15,000 in profit a year and
will also pay the $7.50 state
property tax on the property
which contains the business.
Corporations—will pay an
increase in the corporate excise
tax (like the business profits
tax). Some, however, which own
large amounts of property in
Oregon will realize a decrease in
total taxes paid—at least for the
first year.
The legislature—each session
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must decide if the basic grant of
$900 is enough, too little or too
much for local districts,
depending on the current state of
the economy and the needs of
other services funded from the
state general fund.
The plan is not perfect—no plan
could be. But it does represent a
dramatic change from the
traditional band-aid approach of
improving ways of taxation. It
does provide tax relief for the
majority of Oregon taxpayers
and it covers the first few miles of
the road winding toward equal
educational opportunity for all of
Oregon’s children.
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