The 1999 Kicker: A Boon for Politicians, A Loss for Oregonians

News Release
October 18, 1999

As the Oregon Department of Revenue gives a tour of its kicker check processing operation to the Oregon media today, an independent policy research institute told a different story about the kicker rebate being prepared in Salem.

"The media will have a rare opportunity to get photos of a tale of inefficiency at its political best," said Charles Sheketoff, executive director of the Oregon Center for Public Policy. The policy institute noted that taxpayers are paying over $885,000 to process and to mail the kicker checks by December 1st, as opposed to the approximately $10,000 it would have cost to issue the kicker as a credit on next year's tax return. "That is a heavy price to pay for politicians to secure political brownie points," said Sheketoff.

Sheketoff noted that the cost to process the checks is not the only cost taxpayers will incur. Approximately 600,000 Oregon households who itemize on their federal returns will pay more in federal income taxes. According to the Oregon Center for Public Policy, about $40 million of the $167 million kicker will go to the federal government in higher tax bills.

"Instead of spending the money in Oregon to make Oregon a better place, the legislature chose to send more of Oregonians' money to Washington, D.C. Increasing federal taxes and sending more money to the federal government while ignoring Oregon's needs reflects misplaced priorities," said Sheketoff. He noted that "Oregon's needs" included funding for a rainy day fund, education, health care for children and working parents, parks, and public safety.

In addition to paying more federal taxes, many Oregonians may also be getting smaller kicker checks than they expect. Sheketoff asked the Revenue Department "to be straightforward and to clear the record on what size check the typical Oregonian can expect." He noted the Revenue Department has "regrettably led Oregonians to think they are likely to receive $107 kicker refunds."

"The typical Oregon household will really get $50 or less, or about the cost of one new tire for the car, pickup or SUV," said Sheketoff.

While previous Revenue Department descriptions of the kicker have noted that the "average" kicker check will amount to $107, the "median" kicker check will be about $50 according to Revenue Department calculations. The median is the midpoint of the distribution, with one-half of the population receiving the median or less, and one-half receiving the median or more. The median more accurately describes the amount that the typical Oregon household will receive.

The "average" figure that has been used by the Revenue Department, the media, and others does not represent the typical Oregonian and can be misleading. "Oregonians who think they are likely to get $107 are in for a big surprise," said Sheketoff. "They are more likely to get half that, or $50."

The median is more commonly used when discussing matters related to income and taxes. With a progressive income tax system, credits for the wealthiest few tend to skew the average; the average inaccurately describes what is happening to the majority of Oregonians. As an example, Sheketoff noted that if one wealthy taxpayer gets a $350 kicker refund, and four taxpayers get a $50 refund, the average refund is $110, while the median refund is $50.

Income Group

Approximate Adjusted Gross Income (AGI) of Group

Average 1999 Kicker for Income Group

Percent of Total Kicker to Income Group

Lowest Income Quintile

Below $6,000

$3

0.6%

Second Income Quintile

Between $6,000 and $16,000

$19

3.6%

Middle Income Quintile

Between $16,000 and $28,000

$53

1O%

Fourth Income Quintile

Between $28,000 and $50,000

$109

20.4%

Wealthiest Income Quintile

Above $50,000

$348

65.4%

Wealthiest 10 percent

Above $70,000

$514

48.3%

Wealthiest 1 percent

Above $200,000

$2,004

18.8%

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