Oregon’s unique tax “kicker” law is working exactly as intended, potentially sending more than $1.4 billion — yes, billion — back to taxpayers next year.
Top Democrats in the Legislature’s supermajority should respect the law’s intent, which is to prevent excessive government spending. Instead, they want to spend your kicker refund for you.
This is despite a new and historic $1 billion-a-year tax on businesses, while also having about $2.1 billion more to spend during the current two-year budget period than expected when the biennium began on July 1, 2017.
Democrats already employed fiscal sleight-of-hand only a few weeks ago to reduce the potential kicker by $108 million.
The Legislature has taken only meager steps to control spending in any meaningful way, and still wants to pass other tax increases.
For any politicians who require a refresher on the kicker, here it is: The Legislature created it 40 years ago in hopes of quelling the tax revolt spreading north from California. A brainchild of the legislative revenue officer, the kicker was a way to guarantee lawmakers could not spend large windfalls. Instead, that money would go back to the taxpayers. Isn’t that the way it should be?
The details are that a kicker occurs when state tax revenues from corporations or from individuals and other sources come in at least 2 percent higher than projected at the start of the biennium. The entire surplus then is returned to taxpayers as a credit on the next year’s income taxes. It’s called the “kicker” because the refund kicks in when the 2 percent threshold is reached.
Corporations already have lost their kicker. Voters in 2012 approved a ballot measure diverting the corporate kicker to the State School Fund.
Unless the 2019 Legislature interferes, personal income tax payers will get the credit on this year’s taxes when they file their returns next year.
After the record-size kicker was announced last week, Democrats immediately decried it as excessive, unreasonable and unnecessary. They lacked a sense of proportion. “Oregon’s economy is much larger than it used to be, so the kicker is still expected to be smaller than some as a share of biennial collections,” state economists Mark McMullen and Josh Lehner said in their quarterly revenue forecast last week.
The final amounts won’t be known until the next forecast on Aug. 28, but currently the average filer would receive a $691 credit. Spent locally, that money would be a boon for economies throughout the state — and help Oregonians shoulder the increased costs coming out of the Legislature.
Under the Oregon Constitution, legislators can reduce or eliminate the personal income tax kicker if two-thirds of representatives and two-thirds of senators give their approval. That would require several Republicans to join Democrats.
Democrats will offer carrots, such as directing some of the kicker money toward rural housing, foster care, higher education or the massive PERS liabilities. Those are worthy projects — and a fine use for the extra money the Legislature already has.
But leave the kicker itself alone. No to Gov. Kate Brown’s well-intentioned-but-bad idea of reducing each taxpayer’s kicker by $100 to help pay for PERS.
No to House Speaker Tina Kotek’s enigmatic idea of taking half the kicker for rebuilding a bridge on I-205 and supporting green-energy transportation projects — even though reducing Portland-area gridlock would benefit freight traffic from throughout the state. Kotek this week dropped her proposal, saying there wasn’t enough support for it. No, duh.
And no to any other idea for taking Oregonians’ kicker this year.
In a constituent newsletter last week, Rep. Lynn Findley, R-Vale, capsulized the situation: “Constitutionally, the kicker is a check on excessive taxation. The Oregon Constitution mandates that the excess revenue be returned to Oregonians; unfortunately, that is not the opinion shared by some of my colleagues in the Legislature. However, I believe that every penny should go back to the hardworking Oregonians who contributed to our economic success.”
Everyday Oregonians deserve their money. Hands off it, legislators.