Report: High tax rates could be driving people out of Portland

PORTLAND, Ore. (KOIN) — After the State of the Economy Report was released Tuesday, much of the discussion on its findings was about how Portland has one of the highest income tax rates in the country and whether it’s driving high earners out of the city.

Metro and Multnomah County voters passed big income tax measures to help the homeless and preschool for all. But locals may now see the effects as people with disposable income are choosing to live outside of Portland.

“Really the question is, are people voting with their feet?” said Mike Wilkerson, the Director of Analytics with ECONorthwest, which developed the report for the Portland Business Alliance.

The data shows after years of growth, Multnomah County declined as nearly 13,000 people left the area in 2021, while Clark County’s population increased by 6,000.

While Wilkerson says the conclusion isn’t completely clear, there’s evidence through IRS capital gains data that some high and middle-income newcomers are choosing to settle north of the Columbia River.

“It’s not necessarily an exodus from Oregon to Washington. It might be people leaving the region to go elsewhere and it’s when people are coming to the region now they’re looking at the value proposition. Saying let’s look at the impact of taxation, let’s look at the quality of life, let’s look at the cost of housing, he said.

In a previous report released in October, a consultant for Oregon Business & Industry, compared top income tax rates for cities and states. According to their data, Portland’s income tax rate of 14.7% for high earners is second only to New York City.

The report points out that an individual hits that high earner mark in Portland at $125,000, while a New York taxpayer would have to make $25 million.

“Multnomah County has the highest marginal tax rates in the United States of America, but we don’t have the income to support that level of taxation,” said Portland Mayor Ted Wheeler.

Wheeler says it’s going to be difficult to bring downtown back if people with disposable income are chased off.

“I’m sure that when the voters in Multnomah County supported all of those different proposals and programs, they did it with good intent. But collectively, every time that we vote for an increase, particularly in marginal income tax, that definitely has a dampening impact on investment in our community,” Wheeler said.