Oregon is among a minority of states that tax the income of families living below the poverty line, according to a report released today by the Washington, D.C.-based Center on Budget and Policy Priorities.

For a married couple with two children in 2008, Oregon's income taxes kicked in at $18,900, which was $3,117 below the poverty line for a family of that size, the report said. Only eight other states imposed income taxes on four-person families with less income, while the 33 other states with income taxes allowed low-income families to earn more money before having to pay income taxes.
"Oregon would be better off if poor families could devote more of their income toward food, child care, transportation and other basic needs," said Joy Margheim, policy analyst with the Oregon Center for Public Policy, who examined the report.
Focusing on the 42 states (including D.C.) with an income tax in 2008, the report examined the earnings threshold at which income taxes kicked in.
By that latter measure, Oregon's income tax system was also one of the least favorable for low-income families. In 2008, Oregon trailed only Alabama for the highest income tax bill for a married couple with two kids living at the federal poverty line — $22,017 for a family of that size. Such a family owed $311 in Oregon income taxes, said the report released by the Washington, D.C.-based Center on Budget and Policy Priorities.
Families keeping their heads just above the poverty line also face bigger income tax bills in Oregon than in most states. The report, for example, said that Oregon married couples with two children with $27,521 in income, or 125 percent of poverty, paid $875 in state income taxes for 2008. That amount was higher than the amount that comparable families pay in every other state but Kentucky.
According to a report released last month by OCPP, low-income households pay the highest share of their income toward all state and local taxes combined.
The wealthiest families, by contrast, pay the smallest share.