Chris Dudley says John Kitzhaber wants a sales tax so people without jobs pay taxes

Sometimes, a claim comes along that’s so juicy it makes PolitiFact Oregon salivate.  

This is one: Republican Chris Dudley charges that his opponent in Oregon’s race for governor, Democrat John Kitzhaber, wants a sales tax so people without jobs pay taxes.  He makes the claim in a new television ad, "Again," which has audio and video footage of Kitzhaber from various events, including the Portland City Club in 2000 and a KGW/The Oregonian debate in April. Here’s the full text:
 

Voiceover (VO): Kitzhaber failed Oregon because his answer is always the same.

John Kitzhaber: I have probably had more tax increases attached to my name -- proposals I oughta say  -- than any other governor.   

VO: Now he’s at it again.

John Kitzhaber: Obviously, a retail sales tax is one of the options.

VO: Even worse, Kitzhaber says we need a sales tax so people without jobs pay taxes.

VO: Taxing the unemployed?  We need jobs, not more taxes.

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VO: John Kitzhaber, even his new ideas are old.  It’s time for a new direction.

In the ad, the Dudley campaign pulls this from an Oct. 8 Portland Tribune article:

"Kitzhaber did not hesitate to use the ‘sales tax’ term.... As incomes shrink and the number of jobless remains high, he said, it illustrates more clearly why Oregon needs to stop depending so much on personal income ...."  (Dudley emphasis)

Squeezing taxes from the unemployed to prop up state spending? How mean!

But take a look at the words from the story left out of the ad: "Kitzhaber did not hesitate to use the "sales tax" term, though he said it’s just one of the options that should be under discussion so the state is not so reliant on income taxes.  As incomes shrink and the number of jobless remains high, he said, it illustrates more clearly why Oregon needs to stop depending so much on personal income taxes to pay for the bulk of its general fund budget." (our emphasis)

Very sneaky.

Kitzhaber has long advocated for a sales tax to help stabilize Oregon’s roller-coaster reliance on personal and corporate income taxes. The Portland Tribune article clearly shows that Kitzhaber was not advocating a sales tax as a means to get more money out of the out-of-work, but to increase the diversity of Oregon’s tax base. An August 2010 study by The Tax Foundation confirmed Oregon’s heavy reliance on individual income taxes, ranking the state No. 2, just after Maryland.

But before handing down a ruling, PolitiFact Oregon wanted to check out tax burdens in Washington and in Oregon, just to see how a sales tax would affect the poor, which presumably includes many folks out of work. Oregon taxes income -- including unemployment compensation, as does the federal government -- but not sales. Washington does not tax income, but assesses a base 6.5 percent tax on goods. In Seattle, the sales tax is 9.5 percent.

We found an interesting study by the Institute on Taxation and Economic Policy, a liberal think tank out of Washington, D.C. Its November 2009 report found that Washington was the most regressive state in the country, where households in the lowest 20 percent spend about 17.3 percent of their income on taxes. In Oregon, the figure for that income group is 8.7 percent. The average among states is 10.9 percent. Clearly, it’s a burden to be poor in Washington.

Kitzhaber never said anything about implementing a sales tax to make sure the unemployed pay into Oregon’s tax base. We rate this Pants on Fire: The statement is not accurate and makes a ridiculous claim.

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