How to make the kicker work for all

How to make the kicker work for all

How to make the kicker work for all

Imagine two people. One is a senior citizen who, after a lifetime of toiling in low-paid jobs, now scrapes by on Social Security income. The other is a hedge fund manager pulling in millions a year. Which of these two should get a tax rebate from the State of Oregon?

That’s a pertinent question right now, with a record-shattering $3.9 billion kicker rebate on its way. The rich hedge fund manager will get tens of thousands of dollars in kicker money, while the senior citizen will receive nothing.

There’s never been a more important time for policymakers and the public to consider the inequities embedded in the kicker, and to put forward a reform that makes the kicker work for everyone.

The kicker is a tax rebate triggered when revenue collections come in 2 percent or more above what state economists predicted two years earlier. As state economists will tell you, the kicker “does not mean Oregonians overpaid their taxes, it means our office underestimated revenues.”

Kicker dollars mainly flow to the well-off, and the projected kicker shows that in dramatic fashion. The richest 20 percent of Oregonians are expected to capture nearly 70 percent of the expected kicker.

This gets even more skewed when you look at how much money is going to the richest Oregonians. To be an average member of the richest 1 percent of Oregonians, you need to make over a million dollars a year. Giving this person a tax rebate is like pouring a glass of water into a pool. It makes no difference in their ability to get by or their level of comfort. And yet, as things stand, the average member of the top 1 percent will get a kicker rebate of about $42,000.

It only gets worse from there. We estimate, based on Oregon Department of Revenue data, that the richest 100 Oregonians will get kicker rebates averaging more than $600,000. At a time when many Oregonians can’t afford to buy their own home, we’ll be giving the ultra-rich a tax rebate that’s more than 15 times the typical annual income in Oregon.

At the other end of the spectrum, the kicker is paltry. The lowest-earning 20 percent of Oregonians — folks struggling mightily to pay for food and rent — will get a kicker of about $60, on average.

And that’s arguably not the worst of it. Senior citizens and people with a disability whose only source of income is Social Security will see not a dime from the nearly $4 billion dollar kicker rebate.

The kicker is a policy choice. It was put into Oregon’s Constitution about two decades ago, at a time when many had not fully understood that trickle-down economics does not work as sold to the American public. Today, most of us recognize that giving more money to the rich does not trickle down to the rest. Instead, it concentrates economic power at the top.

There are several bills before lawmakers in Salem this session that would fix the kicker. In the short term, lawmakers can suspend the upcoming kicker with a two-thirds vote. Long-term, kicker reform needs a constitutional amendment, and lawmakers have the power to refer a proposal to voters.

What could reform look like? One approach would be to use the funds to address the housing crisis, improve access to affordable childcare, or tackle some of the other serious problems affecting Oregonians. Alternatively, we could still issue tax rebates but change the formula by which it is distributed. Giving everyone an equal kicker would result in most Oregonians getting bigger kicker rebates. This reform, which we call the Working Families Kicker, would give each tax filer a rebate of about $1,740 from the upcoming kicker — more than double what the typical tax filer will receive under current rules.

It’s time for Oregonians to stand up for working families and people surviving on fixed incomes. Rather than lavish millionaires with massive tax rebates, let’s make the kicker work for all Oregonians.

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Daniel Hauser

Daniel Hauser is the Deputy Director of the Oregon Center for Public Policy

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