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It's time to be bold on kicker reform

Commentary
May 20, 2021By Alejandro Queral

The “kicker” — an unplanned tax rebate favoring Oregon’s richest taxpayers — is almost surely on its way. The latest Oregon Economic and Revenue Forecast projects a $1.4 billion kicker. If revenue collections come in as state economists expect, the richest 1 percent of Oregonians (with an average income of about $1.1 million) will get a kicker payment of about $12,856. Meanwhile, the typical Oregonian, who makes about $39,000, will get a kicker worth about $312.

While the kicker has long failed to serve the interests of Oregonians, the lingering effects of the pandemic make the injustice of this policy more acute. The COVID-19 crisis has exacerbated the already extreme levels of economic inequality. The rich have seen their fortunes swell, while many low-paid workers have seen their jobs vanish.

Inserted into Oregon’s Constitution during the heyday of the anti-tax movement, the kicker requires that when revenue comes in 2 percent or more above what state economists projected two years prior, the entire amount of unanticipated revenue (not just the amount above 2 percent) is sent back to taxpayers. Given the thin margin for error, the kicker kicks often. And because the tax rebates are doled out proportionally to tax liability, the benefits mostly flow to the well off.

Handing a big, fat check to the already rich — as the kicker law is on course to do — serves no defensible purpose. It won’t stimulate the economy, because the rich already have plenty of money to spend. It won’t increase the economic security of Oregonians, because the rich are already secure. Instead, the kicker will worsen economic inequality.

Oregon lawmakers must act in the best interest of Oregonians. They should suspend the kicker and either: (1) invest the resources to help low-income Oregonians afford child care, housing, or other necessities; or (2) reissue the kicker in equal amounts to all low- and middle-income Oregonians — an approach that would result in much bigger, more meaningful tax rebates for those who need them. As a one-time fix for the kicker, such reforms would also allow Oregonians to consider a new approach to Oregon’s oddball kicker law.

This is not the time for being passive in the face of failed public policies. The Oregon legislature should be bold and use this opportunity to lay the groundwork for permanent kicker reform.