Workingman's dread

Down in Salem, the state capital of Oregon, residents are currently voting by mail on a new city "payroll tax," 0.814 percent of all compensation received for work done within the city limits. But it's not like other payroll taxes, in that it's imposed on the workers, and not on employers. That's because the big employers in Salem are the state, county, and federal governments, which the city apparently can't tax. And the tax would apparently cover self-employed people's earnings as well as employee wages.

Although the tax would come out of workers' pockets, employers would be saddled with the obligation to withhold it from employees' pay and send it in to the city government. That's a hassle, but nice work for the accountants.

If you make $50,000 a year, the tax would work out to $407 a year. If you make $100,000, it's $814. As a wise tax professor once suggested, add as many zeroes onto the ends of these numbers as you need to make this interesting to you.

To me, the tax is a terrible idea. It's just one more way to scream to businesses around the world, "Don't set up shop here." Besides, if it passes, many people are going to work around it. In an era when remote work has become the norm, a lot of employees who could sit at a desk in Salem are simply going to sit at a desk in Keizer, or Woodburn, or Albany, and do the same work they've always done in the capital, but without incurring the tax liability. 

The real losers will be the businesses who cater to those workers when they do come to Salem – restaurants, coffee shops, bars, convenience stores, gas stations, and so on. They'll have fewer customers. And some businesses, like doctors, aren't as free to work from home.

City Hall says it's going broke, and that may be true. But you wonder whether the answer might not be to refocus on the basics of government and cut out the waste and fluff, of which I'm sure there is plenty. (There always is.) One factor that we know is contributing to the money crunch are those obscene PERS pensions that the city, like all Oregon polical subdivisions, is forking out to retired workers. Despite the accounting shell games designed to obscure that fact, it sticks out like a sore thumb.

Governor Kohoutek, who lives in a state-owned mansion in Salem, says she's voting no. When somebody like that has finally met a tax they didn't like, you know it's a stinker.

We'll know whether the city has the new tax on election day, November 7. The mood of the taxpayers will be interesting to observe.