Few issues in government get under people's skin like taxes. And few things in Oregon get people more riled up than the question of the state income tax "kicker."
The kicker is an automatic tax refund that goes into effect whenever the state's income tax revenues exceed budget projections by 2 percent. The excess money is refunded directly to individual taxpayers — and corporations — without debate or delay.
And therein lies the disagreement.
Backers of the kicker law say the excess money belongs to the taxpayers and that the government has no right to save or spend it. Opponents complain that the kicker is shortsighted and makes no allowances for occasions where there may be a legitimate and pressing need for the money — especially in a state that sets its budget for two years at a time.
Right now, the kicker question has a particularly keen edge — the state is expected to have a budget surplus of $666 million by the time the Legislature is next in session in 2007. Under the rules of the kicker law, individual taxpayers are set to receive $461 million in refunds, while corporations will receive $205 million.
Kicker opponents say that now is the time to revise the kicker statute to accommodate reality. Public school districts around the state are hurting for money — Portland schools are again scrambling to patch a gaping budget hole without laying off teachers or shaving days from the school year. Social programs, from public health to food support to transportation, face similar budget woes. Withholding all or part of the kicker, they say, would help to remedy these shortfalls without increasing tax rates.
But revising the kicker isn't easy — it's part of the Oregon Constitution and can be changed only by a ballot initiative. Whatever is done, it will be the will of the people.
Clearly a compromise is in order. Here is The Skanner's proposal: We support amending the kicker law in order to share those extra funds with programs that really help people. Both individuals and corporations, for the common good, should give up a portion of their refund. We propose that 25 percent of the kicker — some $166.5 million — be kept by the state and either saved or spent to plug holes in education and other vital programs.
The problem is that both sides in this debate are deeply entrenched in their positions — there's not much common ground to be found. The Skanner's proposal is a good starting point.
What do you think?