Make the kicker work for all Oregonians

April 15, 2022By Daniel Hauser

[This commentary first appeared in The Portland Tribune.]

Tax Day is right around the corner. It’s the deadline for filing your Oregon income tax return and, potentially, claiming a piece of Oregon’s record-shattering $1.9 billion “kicker” tax rebate.

But not everyone will share equally in this bounty — not by a long shot. The richest 1 percent of Oregonians, those making $440,000 or more, will get kicker rebates averaging nearly $17,000. Meanwhile, the lowest-earning one-in-five Oregonians, folks making less than $12,000, will average a measly $30.

This absurd outcome is because the kicker is an upside-down, broken tax policy in desperate need of repair. Now is the time for Oregonians to come together and figure out how to reform the kicker to make it work for all Oregonians.

Over two decades ago, Oregon voters put into the Constitution a tax policy premised on asking the state economist to do the near-impossible. They must predict what the global economy, the national economy, and Oregon’s own sliver of it will do in two years. They must then estimate how much Oregonians will earn in wages, profits, and other income. If the state economist miscalculates by just 2 percent, the entire amount of unanticipated revenue is no longer available to address the basic needs of Oregonians such as education and housing, but is instead sent out as a tax rebate.

Given the exceedingly difficult task of forecasting, state economists get it wrong most of the time. Often, the kicker has kicked at the worst possible time, when a recession has pummeled state revenue collections, leaving the state short on the cash needed to keep teachers in the classrooms and protect essential services that Oregonians rely on.

But here’s the thing: there are ways to reform the kicker so that it serves the interests of all Oregonians.

One option would be to set the kicker aside in a rainy day fund, so that Oregon is better prepared to ride out economic downturns.

Another option would be to use the resources to address some of the large-scale challenges confronting our state. The billions that Oregon is spending on the kicker could instead go to build more affordable housing, increase the climate resilience of communities, or retrofit vital structures to withstand a massive earthquake.

Some fans of the kicker misguidedly argue that the policy is a check on government spending, even as problems that only a collective effort can solve stare us down. But even such defenders of the kicker ought to have no issue with another reform option: an equal kicker for all Oregonians.

If we are going to issue a tax rebate, let’s do so in a way that serves the needs of Oregonians. At a time of vast income and wealth inequality, a tax rebate that mainly benefits the rich makes a bad situation worse. At a time when nearly half of all Oregon families struggle to pay the bills, using the kicker to steer more cash to middle and low-income families is an appropriate approach.

What would making the kicker equal mean? The majority of Oregonians would get more money, because right now so much of the kicker flows to the top. If we had an equal kicker in place right now, the current kicker would send $850 to every tax filer — about double what the Oregonian in the middle will actually get this tax season. For the lowest-earning 20 percent of Oregonians, $850 could help them catch up on rent, fix their car, or put aside some money for emergencies.

Oregonians created the kicker, and Oregonians can fix it. It’s time to make the kicker work for all.

Posted in Budget, Housing, Taxes.