First, some background. The Institute on Taxation and Economic Policy’s definitive report on state tax systems lists Oregon as #42 – within the top ten – of least regressive tax codes in the country (D.C. and Minnesota are #51 and #50, respectively). In Oregon, the lowest 20% of households by income pay 12 percent of their income in state and local taxes, while the top 1% pay 10.4 percent. What contributes to this relatively fair system is that Oregon’s tax code does not have a sales tax and does have:
- a state income tax that is progressive, meaning there are higher tax rates for higher incomes
- an estate tax and
- several refundable tax credits (such as a Child Tax Credit).
