Oregon taxpayers will receive $464 million in “kicker” tax rebates triggered by the torrent of unexpected cash coming into the state treasury.
The state released its August economic forecast on Wednesday, which showed projected tax payments were outstripping original estimates. When tax revenues are two percent above projection, the state constitution requires the entire windfall be rebated to taxpayers as a “kicker” — a short nickname for “kick back.”
“We really did see a surge in personal income taxes and corporate tax collections,” said Mark McMullen, the state economist, in releasing the report. “Given how strong the end of the year finished, it put us squarely into kicker territory.”
Critics note the kicker is a flat tax return — everybody gets the same percentage. What you get back depends on how much you paid.
Though the total for this year is almost a half billion dollars, the median amount going to taxpayers is $89. Those earning under $11,000 will get less than $10. Those making $350,000 will get $4,000.
Don’t look for a check in the mail — the kicker is applied toward an individual’s 2018 taxes.
McMullen said in May that few states have a progressive income tax, but Oregon’s is “about as far away as it gets.”
The kicker is a product of the voter tax revolt that spread across the United States following California voters approval of Proposition 13 in 1978. It rolled back property tax rates and capped annual increases to 2 percent. In Oregon, activists targeted the state income tax. The Legislature passed the kicker law in 1979.
While Oregon would later follow California and other states with property tax limitations, no state has copied the kicker for income tax receipts.
In Oregon, the kicker remained popular, even with changes over the decades. The rebate originally was applied to future tax returns, then was sent as a check, and is now back to being a credit on tax returns.
Many Democrats and progressive political groups would like to see the individual kicker go to education or health care. Most Republicans fiercely support the kicker, saying it serves as an automatic brake on Democratic spending binges that puts money back in the wallets where it came from. Instead of replacing the kicker, Republicans call for more budget cuts.
“A kicker for Oregon taxpayers is good news,” said House Minority Leader Mike McLane, R-Powell Butte. “Thank you to the women and men in our communities that keep our economy growing. Now it’s time for our state government to do its part by reforming the other side of the ledger.”
State Senate Majority Leader Ginny Burdick, D-Portland, did not directly criticize the kicker in a statement released by her office, but said the news should be considered in tandem with the need for a more balanced process for raising and spending money.
“We need to use this time to create a more stable system that works for all Oregonians,” Burdick said.
The Legislature has made revisions in the law and voted other years to suspend it entirely.
The law was upgraded to a constitutional amendment and changes now require a three-fifths supermajority of both the House and the Senate.
— Reporter: 541-525-5280, firstname.lastname@example.org
Editor’s note: This article has been corrected. The original version misstated the percentage of revenue that is included in Oregon’s kicker tax rebate. The Bulletin regrets the error.