In Short

Luxury sales tax proposed for Oregon to help low-income parents, former foster youth

By: - February 4, 2022 6:00 am

A new bill being considered in the February legislative session could create a sales tax on luxury goods to fund a stipend program for low-income pregnant women and foster youth. (Salem Reporter)

A luxury sales tax being proposed by Rep. Brad Witt, D-Clatskanie, could fund a new program offering monthly stipends for low-income pregnant women and youth leaving the foster care system.

House Bill 4079 would create a 3% sales tax on snowmobiles, handbags, jewelry and firearms, among other items, over a certain price point. Oregon is one of five states with no sales tax, and voters have rejected attempts to impose sales taxes several times over the last few decades. 

The 3% tax would be applied to the value in excess of set amounts:

All terrain vehicle: $7,500

Snowmobile: $15,000

Recreational watercraft: $125,000

Civil aircraft: $500,000

Firearm: $5,000

New electronic device: $2,000

Handbag: $500

Clothing: $2,000

Jewelry: $20,000

Motor vehicles: $80,000

New RVs: $125,000

Witt said the proposed tax would generate about $28 million a year and fund the Oregon Freedom Pilot Program, which would supply upwards of 2,000 pregnant Oregonians and youth leaving the foster care system with $750 a month for three years on top of other state and federal benefits.

“We were looking at ways to recover from the pandemic,” Witt said, “and ways in which we can begin to break the chain of poverty so it doesn’t become a generational issue.”

A recent study from the National Academy of Sciences showed that cash aid to low-income mothers increased brain activity and development in their babies, offering evidence that a parent’s financial condition begins to affect children in their earliest moments. 

When it comes to foster youth, Witt said he had heard from former foster youth about the financial difficulties they faced when they aged out of the foster care system at 18.

Jason Williams, executive director of the Taxpayers Association of Oregon, a political action committee that advocates for lower taxes, said the state should fund the Freedom Pilot Program with existing revenue and pandemic relief dollars rather than new taxes.

“This is a terrible time to be raising taxes that impact small businesses,” Williams said.

“This tax will hurt sales. How is an Oregon business going to compete with online sales from another state where they can get it cheaper?”

The tax would apply to certain recreational goods and vehicles.

“The recreation industry was put down during the pandemic. Now that they can come back, we’re going to tax them?” Williams said.

California passed a tax and stipend program in 2021 similar to what Witt is proposing. There, the program provides pregnant women and former foster youth with $500 to $1,000 each month. 

The purpose of the Oregon Freedom Pilot Program is, according to the bill, “To assist low-income former foster children and pregnant individuals to live in dignity.” 

It would be administered by the Oregon Department of Human Services, and recipients would be paid monthly through a debit card.

The money comes with just a few strings, including a requirement that recipients attend financial literacy classes and that they consent to having their special debit card purchases tracked to  understand how the money is being used, Witt said.

After three years, the Human Services Department would report to legislators on the benefits and challenges of the program.

The bill will be worked on in upcoming health and revenue committees and will eventually make its way to the Joint Ways & Means Committee.

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Alex Baumhardt
Alex Baumhardt

Alex Baumhardt is a reporter for Oregon Capital Chronicle. She has been a national radio producer focusing on education for American Public Media since 2017. She has reported from the Arctic to the Antarctic for national and international media, and from Minnesota and Oregon for The Washington Post.