Multnomah County’s tuition-free preschool tax brings in a lot much less cash than backers projected

0
78
Willamette Week

Multnomah County’s number crackers last week forecast a 21% reduction in the amount of money levied on county income tax to fund non-tuition preschool.

Last fall, the “Preschool for All” campaign for election measure 26-214 informed voters that it had consulted with “several technical experts” in order to determine the forecast sales figures.

The money will provide a tuition-free preschool for 3- and 4-year-olds that will benefit from a new income tax of 1.5% for joint applicants with incomes greater than $ 200,000 and 3% for joint applicants with incomes greater than 400,000 USD is funded.

In the fall, the campaign informed voters that the new tax, the first of its kind in the nation, would raise $ 133 million in the first year and increase steadily from there.

Now, the county’s accountants say the number will actually be significantly less – $ 105 million in the first year – and 21% less than the campaign told voters in the first four years.

The commissioners reacted with surprise last week. “Twenty-one percent is a lot,” said Commissioner Susheela Jayapal.

County tax officials said they had included two types of double taxation in pre-election calculations.

The county’s numbers ignored the fact that many high-income earners who would pay the new tax were entrepreneurs who also pay the county’s business tax. It would be unfair to charge them both taxes, the county decided.

This adjustment reduces the income for preschoolers by 19%.

Similarly, residents of other states who earn income in Multnomah County would be taxed twice. The county will instead credit these payers with taxes paid elsewhere. This reduces sales by a further 2 percentage points.

Jack Bogdanski, who teaches tax law at Lewis & Clark Law School, says the county officials should have had their numbers right before the election.

“The code should have been written before we voted,” says Bogdanski. “Why are you discovering this right now?”

Bogdanski notes that the county’s new adjustments favor some taxpayers over others, as the county’s business tax credits go only to entrepreneurs, not workers who earn high salaries. He says this is information that voters should have had before the election.

County spokeswoman Julie Sullivan-Springhetti said the campaign disclosed in materials distributed to voters that double taxation could affect “a small subset of business owners.”

“While significant, these sales adjustments were not unexpected,” she says.

Notably, the 21% reduction in projected income will not reduce the number of children being cared for.

“The program was strategically planned very conservatively to anticipate possible changes that might result from developments in tax legislation,” says Sullivan-Springhetti.

Preschool tax architect Jessica Vega Pederson said the 21% cut was “a bigger success than I expected”. However, Vega Pederson says since the program won’t start caring for children until the fall of 2022, there will be time to make adjustments in how the money is used, including delaying some expenses for professional development and support services outside the classroom.

“Most importantly, we still have enough money to serve the children,” she says.