income tax :( Any legal way around it? (Portland: low income, 2013)

[freemkt]

Originally Posted by joe_obody999

How would the average/year over ten years differ from a year? In fact as ten years passed, at least my high dividend investments would grow, meaning a higher ratio of taxable investment income compared to spending (sales tax savings) which usually decreases in retirement.

The above said, I just tallied up my spending during the past year, figured the sales tax savings living in Portland (against 8.4% sales tax in Vancouver), and the difference was only a couple of thousand; plus as a bonus settling in Portland, where I will be buying a new car with cash, I will save another $1600 or so on arrival in Oregon by not paying that new car sales tax!

The average person is likely to make at least a few big-ticket purchases over a ten-year period e.g. car, major appliances, major home repairs or replacements (like say a new roof). You may well not make any such purchases in a single year, but you will almost certainly make several over a decade.

[joe_obody999]

Originally Posted by freemkt

Oregon has a graduated income tax, so not all of your income will be taxed at that rate. There is a limited adjustment to taxable income for the federal income tax you pay, plus your personal exemption; Social Security is also exempt. I think approx your first $10K dividend income will not be taxed. Then you have marginal tax rates of 5% and 7% before you hit the higher rate you mentioned. So I think your dividends will end up taxed around 8 percent

nice! i think all that makes it worth living in OR over Vancouver WA. I am letting go of living in Vancouver, Oregon looks doable tax-wise from all this great information. Now I am just looking at the 'doom and gloom overcast gray skies and rain' issues, initially a worry, perhaps valid, but maybe not, for me (coming from Duluth MN). I found some nice data charts on hourly cloud cover in Portland throughout the year and am going to post that this morning with a few questions. Data charts sometimes get more at the truth than people's emotions and perceptions on weather.

[Steve Pickering]

Originally Posted by freemkt

The average person is likely to make at least a few big-ticket purchases over a ten-year period e.g. car, major appliances, major home repairs or replacements (like say a new roof). You may well not make any such purchases in a single year, but you will almost certainly make several over a decade.

Nice to see someone understood the basic mechanics of my comment. The reality is they are about the same. It cost a finite amount of dollars to run a state. The source of those dollars may vary, but the amount in total from all sources remains the same. Now South Dakota is another story.

[Pretzelogik]

Originally Posted by freemkt

Oregon has a graduated income tax, so not all of your income will be taxed at that rate. There is a limited adjustment to taxable income for the federal income tax you pay, plus your personal exemption; Social Security is also exempt. I think approx your first $10K dividend income will not be taxed. Then you have marginal tax rates of 5% and 7% before you hit the higher rate you mentioned. So I think your dividends will end up taxed around 8 percent

Oregon Income Tax Rates for 2014 9% after $16,300...some super duper graduation.

[VTHokieFan]

Originally Posted by joe_obody999

So I am looking to possibly move to the Portland area, or maybe Vancouver WA because of the tax situation. I really would like to move to Portland, but the 9.9% state of OR personal state income tax versus the 0% personal state income tax in Vancouver just across the bridge kind of makes it a no brainer for a retiree, right? Or is there any way to legally avoid some of that ~10% taxation by Oregon, that would then let me move to OR instead of Vancouver WA? One thing I do not understand is I just read on the web how the State of Oregon does not impose: Business and occupations tax"; I don't understand that-- does that mean i could e.g. form an LLC for film production and my LLC would not be subject to Oregon state taxes?

Not make more than $125,000.

Originally Posted by Pretzelogik

Oregon Income Tax Rates for 2014 9% after $16,300...some super duper graduation.

Exactly. Oregon's "graduated" income tax is laughable. It goes up so quickly that it's effectively only graduated if you're working for near minimum wage. And it's actually 9% after $8,150 if you're single.

And what's even worse, the tax actually winds up being regressive in some cases.

[VTHokieFan]

Originally Posted by JasonF

Exactly. Oregon's "graduated" income tax is laughable. It goes up so quickly that it's effectively only graduated if you're working for near minimum wage. And it's actually 9% after $8,150 if you're single.

And what's even worse, the tax actually winds up being regressive in some cases.

Despite that, I still come out pretty even. I figure I'm either paying a 9% income tax, or a 5% income tax and a 5% sales tax. I paid a 6.7% effective rate in 2013; I found that actually puts me ahead of Virginia (where I moved from) that taxes 1) Income at 5.5% 2)consumption at 6% and 3) the value of your car at 5% or so. I probably saved a hundred dollars or two overall moving here.

[Adamson865]

Originally Posted by freemkt

The average person is likely to make at least a few big-ticket purchases over a ten-year period e.g. car, major appliances, major home repairs or replacements (like say a new roof). You may well not make any such purchases in a single year, but you will almost certainly make several over a decade.

Perhaps the average person, but those who are renters such as myself definitely fall out of that equation. The income tax is a far worse prospect for me, paying income tax on every dollar I make vs. paying sales tax only on taxable items.

[Hemlock140]

The best tax situation is to live in Vancouver, and do all of your major purchases across the river in Portland. We drive down there (or through on vacations) from the Seattle area and always try to time it to any major purchases that will fit in the car (or take the truck.) It's nice when you can save 10% on something like a $700 I-Pad and you are going there anyway so it's not additional gas.

[KJoe11]

Originally Posted by Steve Pickering

Nice to see someone understood the basic mechanics of my comment. The reality is they are about the same. It cost a finite amount of dollars to run a state. The source of those dollars may vary, but the amount in total from all sources remains the same. Now South Dakota is another story.

again, conjectures and assumptions about tax equality does not equate to factual outcome. It is merely an opinion.

As for income tax versus sales tax:

Penalizing a person for having a job while rewarding others for not working is not a fair system. Everyone should have to contribute in paying taxes. The sales tax allows everyone to have "skin" in the game.