TWTLYZ MEDrORD (OREGON)
topgap
Senator Lovry Tells
Of Tax Discussions
As Session Hears End
(Xditor'i net: Tha Oregon
it. Held back only by the necessity of presenting a finished
program of taxation. The debate is far from resoWed, and the
"situation is changing from hour to hour." In the following
article, Medford's State Sen. Philip B. Lowry, a member of
the Senate committee on taxation, describes in detail the
thinking of legislators, the possibility that a sales tax may be
enacted, and the other phases of the one big eroblem which
the legislature has yet to solve before it can go home.)
By STATE SEN.
From patchwork and stopgap
to attempted permanence in our
Oregon tax structure is the goal
of atrong elements of both the
Senate and House Tax commit
tees at this moment.
Whether these efforts will be
successful is still uncertain. The
final decision, in any event, will
probably rest with the voters, at
a special election during the
summer.
The Senate Tax Committee
Tuesday concluded another in a
series of frequent and lengthy
meetings to re-review the situ
ation. Oregon taxes are going to
have a new big look during the
next two years. The only alter
native is that the voters will, in
effect, say to the legislature that
they want no new taxes, but
prefer to reducebasic school sup
port, welfare and higher edu
cation. These are the substantial items
in the budget and the only place
where any real cutting is possi
ble. Faets Stated
Reduced to very plain facts, it
now appears that the Ways and
Means Committee will submit a
final budget requiring new reve
nue of $62,200,000. This will' be
scaled down only to the extent
that the recommended building
program of $14,900,000 is reduced.
Re-checks of existing revenue
sources resulted 'in the Senate
tax committee's eliminating any
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MAIL TRIBUNE
to f ormanence:' Can 1
Legislature is Bearing adjourn-
PHILIP LOWRY
hope for increases from present
tax sources.
It may be that we are on the
conservative side in deciding
that income, excise, liquor and
insurance premium taxes will
show no increase. However, it is
the belief of the members of the
committee that conservatism in
public finance is better than to
assume the risk of a deficit at the
end of the blennlum on June 30,
1957.
The House Tax Committee
plan submitted to the Senate had
upped these estimates by $6Vfe
million. Testimony before the
Senate Committee showed that
we would have to experience a
considerable upturn in the Ore
gon economy to justify increas
ing the estimates and that there
has been no noticeable change in
the rates of current collections,
which would justify counting
upon these increases.
New Taxes Planned
New taxes already passed or
likely to pass have been added
as follpws:
Increased tax on in
surance premiums $1,500,000
Markup on liquor 2,500,000
Removing utility
exemption 920,000
Cigarette tax 8,800.000
New corporate in
come tax (separate
from corporate
excise tax) 200,000
To this, the House added an
G0O
CDCniHI I
Thursday, April 21, 19S3
item of $3,700,000 resulting from
the increase in the withholding
tax from 1 per cent to 2 per
cent. This does not represent a
r.ew source of revenue. It simply
accelerates the time when the
state receives the money and
would never again be available
unless withholding rates were
again increased.
These new taxes cannot go
into effect in time to yield rev
enue for the full two-year period
of the biennium commencing
July 1, because we cannot at
tach the emergency clause to
any tax legislation. They will
become effective 90 days follow
ing adjournment. For that rea
son, it is necessary for the Sen
ate Tax Committee again to
scale down the estimates of the
House Committee as to the ex
pected yield of the new taxes.
Attractive Figures
Simple arithmetic produces
the result, after arriving at
these decisions, that the balance
to be raised by increased income
taxes, a sales tax, a state prop
erty tax, or a combination of
them, is $44,580,000. This is a
staggering figure when credit is
given for the $7 Vis million sur
plus which we anticipate will be
on hand on July 1, 1955.
Assuming that the legislature
adopts the recommended build
ing program of $14,920,000 and
decides to finance it currently,
rather than from bonds, the re
quired increase in income taxes
to meet the deficit is not 32 per
cent, as the House estimated, nor
around 50 per cent, as we cal
culated last week in the Senate
Tax Committee, . but instead
about 60 per cent. If the ciga
rette tax is referred and de
feated, the income tax increase
required would have to be ap
proximately 70 per cent, unless
we let part of the load fall on
a state property tax.
The overall percentage in
crease to any given individual
would, of course, vary in accord
ance with the effect of his Fed
eral tax deduction.
Surplus Almost Gone
This . situation results from
the near exhaustion of the war
time surplus and the .fact that
a
i p3)
.1 : 7 '
population increases in Oregon
have stretched our state institu
tions to the bursting point.
If the state is going to take care
of prisoners, tubercular patients
the feeble minded and mental
cases, it must shortly expand its
facilities to do so, unless we are
willing to allow these institu
tions to operate on a substand
ard scale. The day of reckoning
is at hand, and the days are gone
when we can any longer count
on the war surplus to allow us to
spend around $20,000,000 annu
ally in excess of revenues, aswe
have done for so long.
Opinion is somewhat divided
in the legislature as to whether
the building program should be
bonded or paid from current ap
propriations, and . whether it
should be held to around $10,-
uuu.uuu. .Bonding requires an
election, which, if not immedi
ately called, would, delay start
of construction on urgently
needed buildings.
Interest Factor
Bonding also brings in the in
terest factor and reverses the
traditional Oregon policy of pay
ing for its state institutions from
current appropriations. On the
other hand, a bond program
would soften the blow to the
Oregon taxpayer in the immedi
ate future. Heretofore, we have
had no hesitancy to vote bonds
to construct highways and pay
the Veterans' bonus. As yet, we
have not even figured out a way
to discharge the bonus bonds.
If we adopt the bonding ap
proach and it is approved by the
voters, it becomes an open invi
tation to future sessions of the
legislature to take this method,
and that may not be altogether
desirable.
, The Ways and Means Commit
tee should soon advise us what
the extent of the building pro
gram will be and its method of
financing. At that point, we will
know exactly how much revenue
will be required, and we can
make a final calculation as to
how stiff the income tax in
crease will be, if we are going
to use that approach.
Doesn't Criticize House
It should be made absolutely
plain that no criticism is due the
House and its Tax Committee
for the program submitted to the
Senate. Budget savings hoped
for by the House Committee
have not materialized. Governor
Patterson's budget has proved to
be very tight, without eliminat
ing existing state services. Also,
the House hoped that the build
ing program could be held to a
smaller figure and this may yet
be possible. Too, the House was
anxious to send the Senate the
framework of a tax program as
soon as possible, because all
revenue bills must originate
there. We have had the advan
tage of reviewing estimates on
an up-to-the-minute basis and
also have had the benefit of
public reaction to the House pro
gram.
The Senate Tax Committee is
now exploring the impact of an
income tax increase going as
high as 60 or 70 per cent, with
due consideration as to how this
should be spread among the tax
payers falling in the different
brackets. This means our re
examining all . the various in
come tax proposals from pro
gressive bracket increases to a
universay income 1 tax in the
light of the highest increase
which may be necessary. . -Encouraged
Sales Tax Bill
Our Senate Tax Committee,
by a vote of 5 to 1, encouraged
the House Tax Committee to
send us a general sales tax bill,
in order that it could be consid
ered as one of the possible solu
tions of the problem.
We now know that the House
has such a sales tax bill ready,
but it is very uncertain whether
it will be favorably acted upon
in the House. This we should
know within the next couple of
Senate may refuse to approve
days. It is also possible that the
an income tax increase going as
high as 60 or 70 per cent. If the
Senate should approve, there
would then be the question as to
whether the House would con
cur in view of the fact that the
32 per cent increase income tax
bill had a margin of only one
vote in the House.
Despite press reports, a ma
jority of the Senate Tax Com
mittee is still reluctant to put
out . a sales tax bill. Senator
Steeh and I have stated that we
will vote to put it before the
Senate, if the House enacts it.
The present thinking of a ma
jority of the House Tax Commit
tee is to enact increased income
tax legislation in whatever
amount is required to meet the
applauds the , move toward a
vision that theincreases and ex-
Daily's U-Drive
Medford Airport
goalafcur
tensions to the lower-bracket
taxpayers will not go into effect,
if a general sales tax is adopted
at a special election of the voters
to be ' called within approxi
mately 60 days after adjourn
ment. Like anyone else, we read the
newspapers. The Oregon Journal
applauds the move toward a
sales tax. The Oregonian, on the
ctlier hand, deplores the rush in
this direction, describing it as
premature. ;
We know that many other edi
tors, as well as the public, won
der why we cannot make up our
minds in less than 100 days.
Members of the Tax Committees
do not live in a vacuum and we
are aware that there has been a
significant change in the attitude
of Oregon voters toward the
sales tax since we convened. We
cannot, of course, determine the
extent of the shift.
At the outset of the session,
we had an inexact idea of the
extent of the deficit. Moreover,
it takes' time thoroughly to go
over a $200,000,000 budget. An
nouncement of legislative inter
est in a sales tax will enable
us to get an additional reaction
from the public. This could, to
a large extent, influence the out
come within the next few days.
My own belief is that we
should exercise our own judg
ment as to the best way to solve
the problem, and if the voters
decide to reverse us, we must
then return for a special session.
Strategic considerations, in my
opinion, should not enter into
the . picture in making our de
cisions as to how to finance Ore
gon for the next two years.
Without question, it is a difficult
task to do this, knowing that
our judgment can be upset by
referendum on , an income tax,
a sales tax or a cigarette tax.
Has Fared Badly
Heretofore, the sales tax has
fared badly at the polls, in Ore
gon: For Against
1333 45,603 167,512
1934 64,677 156,182
1936 32,106 187,319
1938 112,172 219,557
1944 . 96,697 269,276
1947 67,514 180,333
The Jackson County figures
are also interesting:
For Against
1933 2571 4024
1934 4555 3193
1936 1710 5380
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In the midst of all this is one
very hard fact. A failure of any
one of the substantial new
taxes could result; in the auto
matic collection of the state
property tax to the extent of the
6 mill limitation for the first
time since 1942.
To Jackson county property
owners, this would mean be
tween 8 and 9 mills, because
bonded indebtedness is not with
in the 6 mill limitation. There is
general agreement on the Tax
Committees that this is to be
avoided if at all possible. This
decision, however, is in the
hands of the voters who have
the right to decide what taxes,
if any, will be referred.
To Close Loopholes
The Senate ' Tax Committee
has worked steadily during the
session to draw and pass a series
of bills eliminating tax avoid
ance and tax evasion devices to
the fullest possible extent. They
have not attracted wide atten
tion, nor will they raise great
amounts of revenue, but they
do indicate that we have been
diligent in closing as many loop
holes as possible.
A broad base tax is inevitable
in Oregon, if we are going to
continue the rate of public ex
penditure established for the
past several years. We have not
yet felt the full shock of school
requirements that are going to
be upon us within the next few
years. A growing population in
Oregon has brought financial
problems which have not con
fronted previous legislatures.
My hope is that the legislature
will adopt, and the public will
sustain, principles of 'taxation
which will have permanence.
BILL SENT TO GOVERNOR
Salem (U.R) The House
passed and sent to the governor
yesterday a bill which would
give a person the right to de
mand a jury trial in Municipal !
Court if conviction would sub-!
ject him to a penalty of more
than 10 days in jail or a fine of
more than $100.
GREEK GUILTY?
Atlanta, Ga. U.R) Thieves
broke into a Greek Orthodox
church here and stole a type
writer that will write nothing
but Greek letters, police re
ported. Jl Ml ill'.i.l.'i.l'l1 mi I i I uiui l.'i' . ill .n Jim
Db
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Gen. Ridgway Offered,.
Job by Kaiser Firm
Oakland, Calif. (U.R) Offic
ials of the Henry J. Kaiser Com
pany have disclosed the firm has
approached Gen. Matthew B.
Ridgway, Army chief of staff,
about joining the company when
he retires next August.
A company spokesman said
last night that Edgar Kaiser,
president of the firm, confirmed
he has been discussing the mat
ter' with Ridgway in Buenos
Aires, where both men are now
visiting.
Kaiser said no decision has
been made as yet.
Actress, Band Leader
En Route To Honolulu
Hollywood (U.R) Actress
Mamie Van Doren and band
leader Ray Anthony' hopped' a
plane to Honolulu early today
for a "vacation" jaunt that pos
sibly may end with a wedding.
, Anthony admitted as he board
ed a Pan American airliner that
they "could very well" be mar
ried on the trip.
CARS COLLIDE
Cars driven by Stanley W.
Merrell Jr., 211 North Peach st.,
and George A. Galbraith, 1165
Morrow rd., collided at the inter
section of Highway 62 and Bid
die rd. at about 3:53 p.m. yester
day. Damage was confined to the
right front and- side of both ve
hicles. There were no injuries,
and no citations were issued, of
ficers said.
Dead line Sunday Classified Is at
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Salem U.R) The House, yes
terday passed a measure which
gives the governor broad emer
gency powers in event of enemy
attack. It Drovides for taking
over the supplies and equipment
and for reimbursement xo
owners.
EXCLUSIVE IN THE MAY JOURNAL
Whom will
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Margaret
marry?
Will it be the dashing R.A.F.
captain Peter Townsend?
You'll learn who some ef her
other suitors are ... how difficult
it is to take her out .'. . where the
princess goes on dates ... what
happens if she doesn't like some
one on the party list?
Don't miss this little-known, In
side story of "Princess Margaret
and Her Beaux." ,
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