Even more terrible than I thought
The economic assisted suicide proposal known as the Multnomah County capital gains tax – to provide free lawyers for deadbeat tenants to jerk their landlords around – will be so expensive to administer that it will eat up all the revenue and more in the year it is set up. And it may cost half the revenue it raises every year on an ongoing basis.
So says the head sadist at the Portland City Hall revenue bureau, which will administer the tax if it passes. The Weed, whch has assigned Jack Ruby to cover the balot measure, has the lowdown here.
The last thing in the world Portland needs right now is another tax, much less an utterly misguided and ridiculously inefficient one. Kids, I know you want to stick it to The Man, but all this is going to do is increase your rent. Please, please, may this garbage fail.
Here's something only a tax attorney would appreciate ... The measure says the tax is based on the IRS DEFINITION of capital gains. But that’s not the whole story. That’s because Measure 26-238 does not include any of the IRS EXEMPTIONS from capital gains. So, until the MultCo tax, you don't the $500k exclusion on a home sale. MultCo will tax all of the capital gains.
ReplyDeleteMaybe, maybe not. Under the federal tax law, much or all of the gain on sale of your home is excluded from gross income. If it isn't even gross income, it probably can't be a capital gain. But it would be up to Oregon's fearless judges to interpret the new law, I suppose. Who knows what they would say?
ReplyDeleteIt’s a capital gain in IRS Code subject to exclusion. https://www.irs.gov/taxtopics/tc701 “ If you have a capital gain from the sale of your main home, you may qualify to exclude up to $250,000 of that gain from your income, or up to $500,000 of that gain if you file a joint return with your spouse.”
DeleteThe law in not in some IRS publication. Section 121 of the Inernal Revenue Code says that *gross income does not include* the gain. If it's not gross income, how can it be a capital gain? Again, it's not entirely clear. Which is reason enough to vote no.
Delete^This, & there are all sorts of exemptions for home sales…
Delete…’owner occupied’ 2 of the last 5? Years federally usually no big deal federally, no?
There’s all kinds of creative ways not to pay capital gains in real estate, even with the median home price & taxes getting pretty stratospheric, displacing people/communies & rent rising as a result with all the little fees and liberal scolding / annoying rules & californication and corruption here…
Lots of exemptions and a big jerkoff / thing sliding sideways probable to administer it efficiently/non-coercively.
Idk about it always being ‘deadbeat tenants,’ / name calling as much, but maybe there’s some bleeding hearts and middle men for sure…
Here is one more reason this is a bad idea — Multnomah County already can’t hire enough attorneys to fill the need for public defenders. Where will they magically find the attorneys to take on this goofball task?
ReplyDeleteA tax that costs more to administer than revenue provided - now we are just getting trolled.
ReplyDeleteI will leave you tax nerds to duke it out over capital gains definition, but it seems every Oregon tax ambiguity is interpreted to screw over the taxpayer (see: treatment of out-of-state income for Multnomah tax vs. SALT tax workaround). FWW, this article concludes primary residence exemption will not apply (https://perkinsaccounting.com/wp-content/uploads/2023/03/MultCo-Capital-Gains-Tax-Impact-Analysis.pdf)
Piling on now:
Setting aside whether providing free attorneys is a good idea, the implementation could hardly be worse:
Somewhere around 1/3 of households have after-tax investment accounts - and there is no exemption amount - the number who should pay will be much greater than 8%. Add in a dash of honest filer resentment against those that simply don't pay (estimated 25% non-compliance for the arts tax)
Got a $15,000 capital gain? You'll probably pay more to your accountant to prepare the tax return than you'll pay in actual tax. County-wide, assuming 8% filers (27k) at $100 a pop (less than I paid for SHS form) that's a cost of $4M in tax prep.
It's also a goal to irritate the taxpayer. Instead of combining homeless, preschool, and eviction tax on one form, I assume it will go from two to three forms.
Again - regardless of whether these are good ideas, why can't these measures just change the rate of existing property or income taxes?
As I'm writing my Preschool for All that has, what less than 1000 kids in preschool for $187 million confiscated...and the (not so) Supportive Housing Services tax that, so far as I can tell, supports nobody, I have a few thousand reasons to realize that yes, area residents are exactly that stupid.
ReplyDeleteOne more reason I'm glad to be just outside of the tri-county area, though that doesn't seem to stop them from testing the waters. After the recent disasters with the Portland-administered Metro housing services income tax (who knew?), in an apparent attempt to overcompesate those in charge are sending out post card reminders to folks in North Marion County. WTF?
ReplyDeleteat some point, they'll just build a wall to keep sane wage earners from leaving, a la the one that appeared overnight East Berlin.
ReplyDelete(They'll probably impose a Wall Building Supportive Tax, too, on anyone foolish enough to stay.)
Jack, I'm a renter and I absolutely HATE this proposed tax! My income is maybe 60% AMI, but I also have a modest mutual fund that is my only hedge against so-called retirement realities (and I'm in my 60's). I'm theoretically the demographic this is intended to help, but I would actually be victimized by it. People who drafted this are morons. No one needs this, it's not a solution.
ReplyDeleteThe social turbulence and tax burden in Portland is pushing the economy towards collapse. I can organize my day to avoid areas that might not be safe. But, I can’t avoid the tax’s that are dreamed up.
ReplyDelete