Oregon prides itself on not being afraid to be different. Often that’s a good thing, as when the state passed the nation’s first beverage container refund bill in 1971, or when it enacted the nation’s most comprehensive land use regulations in 1973.
Sometimes, though, it’s just a dumb thing – the prime case in point being enactment of the “kicker” law in 1980.
Under the kicker law – the only one of its kind in America – the state has to send refund checks to taxpayers whenever tax revenue exceeds the anticipated amount by more than 2%. The kicker has been hugely popular with voters even though it makes the state more vulnerable to swings in the economy, the median refund is less than $200, and the richest 1% of the state’s taxpayers typically get 20% of the kicker money.
It doesn’t look like individual taxpayers will be getting kicker refunds this year; thanks to the Great Recession, revenue from state personal income taxes figures to be $1.2 billion less than was anticipated when state lawmakers made up the budget for the current biennium. (And it could get worse.)
Oregon corporations, however, are another story.
Thanks to drastic cost-cutting measures, including massive layoffs and pay reductions, corporations that do business in Oregon are showing record or near-record profits. (We can’t resist noting in an aside here that this is happening despite the supposedly horrific effects of the Measures 66 and 67 tax increases.)
Because corporate profits are higher than expected, revenue from the corporate income tax likely will be higher than the state projected. Because of that, Oregon probably will have to send kicker refunds to the corporations – more than $42 million, according to current estimates. (And it could get worse.)
Absurd, ridiculous, ludicrous, asinine – we run out of adjectives trying to describe the insanity of this situation. At a time when schools, police and other vital public services are on the chopping block, it’s almost criminal to even be thinking about giving tax refunds to highly profitable corporations.
Devotees of trickle-down economics claim that returning the kicker will help the economy because corporations will use it to create jobs. The trouble with that argument is that it assumes businesses aren’t hiring because they don’t have enough money. In fact they have buckets of money – what they lack is customers. And they have no reason to expand and hire more workers until consumer demand picks up.
As Chuck Sheketoff of the Oregon Center for Public Policy puts it: “Profitable corporations don’t need charity from the state of Oregon.” Unfortunately, as long as the crazy kicker law is on the books, the state has no choice but to give corporations that $42 million handout.
Sheketoff expresses hope that this bizarre situation will inspire legislators to reform the kicker law. We hope the lawmakers listen to him. If they don’t, we hope Oregon voters will finally get wise to the idiocy of the kicker and someday join us in giving it THE BOOT that it should have gotten long ago.
This article appears in Sep 2-8, 2010.
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Actually, the legislature doesn’t have to send out the corporate kicker. They can vote to suspend it, as they have two of the eight times a corporate kicker was due. Most recently they kept $344 million of corporate kicker following the 05-07 biennium. That was the largest corporate kicker we’ve evern had.
Like California’s Prop 13, the Kicker legislation is reactionary. Prop 13 appealed to a frustrated property owners who saw politicians use property taxes to fund projects that went beyond education and infrastructure and safety services–the essentials that a homeowner might think were ‘legitimate.’ When taxes on homes exceeded mortgage payments for some; when fixed income families began to lose their homes; when politicians ignored the problem and treated misfortunes they caused by their ‘pet project’ legislation, Howard Jarvis appeared and the California Constitution now limits property tax rates. A constitutional revision to change Prop 13 can never pass–the government is hamstringed and politicians are unable or unwilling to do anything about it or the way they do business in Sacramento.
That’s the way the Kicker is. Repeal of a clause in our Constitution has no chance–zero–none–zip–nada! The populists are suspicious about everything coming out of Salem, and today everyone but politicians are populists. Democrat or Republican, they refuse to see linkage between funding and legislative demands–fail to acknowlege it. Bad tax law plus bad legislation plus poor leadership plus an uninformed, determined, anti-government electorate equals the disaster that Oregon has been in the past, is today, and will remain in the future.
The 2007 diversion into the rainy day fund was just that, a diversion. The real issue is how to balance a budget where tax revenues fluctuate so wildly because their base–income taxes–do the same. Oregon lacks the political will on all fronts to change that.