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Monday, March 18, 2013

The Arts Tax Debacle Continues

Posted by Nathan Gilles on Mon, Mar 18, 2013 at 3:15 PM

It looks like the Portland Arts Tax, approved by 61 percent of voters last fall, is having still more trouble.

In a press release issued earlier today by Mayor Charlie Hales’ office, the city is now saying the arts tax’s legal language “contains a significant flaw.” And it's a flaw that could make folks who really shouldn’t have to pay the tax—like underpaid teenagers—obligated to pay the tax.

That flaw in legalese implies that anyone with any income that lives in a household above the poverty line is required to pay the tax. As the Hales’ press release very artfully and humorously puts it, this could have some very silly unintended consequences that could mean, “in a household that is above the poverty line, a teenager who made $10 last year dog-sitting is expected to pay $35 of that $10 to the arts tax.”

The press release goes on to quote Hales as saying: “This is just silly. And we need to move right now to address the Law of Unintended Consequences.”

There’s also a promise to look into any other issues of fairness at a later date.

Not in the release, however, is the question of just how much this written snafu will affect any revenue the tax is expected to yield. Turns out, it won't have much of an effect at all. Those numbers are based on taxpaying rates that come from Multnomah County—rates that are based only on eligible taxpayers and don’t include underpaid dog-sitting teenagers (though I’ll admit I haven’t looked that closely at the numbers). But this doesn’t mean the tax revenue is a sure thing.

As the Mercury and other outlets have noted, the expected revenue from the tax at the end of the first fiscal year is only going to be $8.9 million. That’s because only 85 percent of the roughly 400,000 folks eligible to pay are going to pay, and only 75 percent of those are expected to pay on time.

So maybe we should consider charging those freeloading teenagers after all? Quick, mayor! Drop that red pen!

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