Oregon has a state income tax. A little story about how that can work out. My wife was living in Portland when we were engaged. She had been quite sick that year and as a result she had lost her job. Because she wasn't feeling well she took a lower paying job at the location her cousing worked. They were both about 22 years old at the time and making a whopping $5.00 an hour. Her cousin had a 5 year old child from a teenage pregnancy . At the end of the year my wife had made just under $11,000 thousand. She ended up paying about $2000 in state taxes, social security and such leaving her a net of about $9000. Her cousin recieved a earned income tax from the state and from the Feds In addition, she was getting free daycare for her child which was running about $600 a month, food stamps of about $300 a month, and Section 8 free housing. At the time I figured out that her income, if you count the benefits, was about $32,000. Almost 3.5 times what my wife's income had been.

Any state income tax will eventually become full of exemptions, benefits and loop holes. As regressive as a state sales tax is, at least most of us can not get around not paying it. My gut feeling is that the second we get an income tax, we will see corporate exemptions, earned income credits, and thousands of other loop holes and exemptions. Those of us in the middle class will end up paying much more and spend more money to accountants for the priveledge to do so.