Income Tax Kickers Disproportionately Benefit Multistate Corporations and Wealthy Oregonians

Issue Brief
March 28, 2006 Download PDF

If the amount of Oregon revenues collected over a two-year budget cycle exceeds the state economists' projections made near the end of a legislative session by two percent or more, the entire amount of the unanticipated revenue is returned to taxpayers. This Oregon policy is commonly known as the "kicker."

The March 2006 Oregon Economic and Revenue Forecast projected that when the current budget cycle ends in June 2007, unanticipated revenues will exceed the May 2005 forecast by more than two percent for both personal and corporate income taxes. While the final kicker amount (if any) will not be definitively established until the September 2007 “close of session” forecast, the current estimate is that personal income tax kicker refund checks in November 2007 will total $460.5 million and corporate income tax kicker tax credits for 2007 will total $205.4 million.

Corporate Kicker Helps Profitable Multistate Corporations the Most

The corporate kicker comes in the form of a tax credit against projected tax liability for the second year of the biennium. The 2005-07 corporate kicker is currently estimated to reduce the 2007 income tax liability of corporations operating in Oregon by 55 percent and is currently estimated to cost $205.4 million. Because it is a tax credit, it will help only corporations that are profitable in 2007.

Personal Income Tax Kicker Helps Primarily the Wealthy

The personal income tax kicker is calculated as a percent of individual taxpayers’ tax liability during the prior tax year. If the kicker ultimately kicks in the fall of 2007, taxpayers will get a refund based on their 2006 tax liability.