Should a family living below the poverty level have to pay state income tax? Most states say no - but Oregon says yes.
According to a report released yesterday by the Washington-based Center on Budget and Policy Priorities, the income tax in this state for a family of four kicks in at $19,800. That's $2,180 below the federal poverty line for a family of that size.
"A two-parent family of four living at the poverty line with just $21,947 in income had to pay $200 in Oregon income taxes in 2009, the fifth-highest amount among states for a family of four at that income level," a news release from the Oregon Center for Public Policy said. A "nearly poor" family of the same size with an annual income of 125% of the poverty level - $27,434 - would owe $764, the fourth-highest amount in the nation.
Those amounts might not seem huge, but for a low-income family they could mean the difference between paying the rent or being evicted, or between paying the utility bill and having the power turned off.
Only 13 of the 50 states levy income taxes on families living at the poverty level, the OCPP said. Nine Eight states have no personal income tax.
"The bottom line," said Joy Margheim, an analyst for the OCPP, "is that Oregon not only sets the level for having to start paying income taxes much lower than most other states, but it also imposes one of the heftier income tax bills on low-income families once they rise above that income level."
Margheim said the report underlines the need for a "robust improvement" in Oregon's Earned Income Tax Credit, a refundable income tax credit for low-income people who work: "A boost to the state's EITC is the most efficient and targeted way for Oregon to raise the income tax threshold and end the practice of taxing the work effort of working poor families."
A coalition called Oregonians for Working Families, including more than 95 health and human service organizations, labor groups, businesses and local governments, plans to "push for a significant increase in the state EITC" next year, the OCPP said.