That tax season falls during springtime cannot be coincidence. Folks are probably more willing to shell out their share to Uncle Sam during April than they would be in dreary November.
Warm weather is nice, of course, but a tax cut would really lessen the blow. At the state level, though, such a cut is unlikely. If state lawmakers are not considering tax cuts, at least a tax credit might be helpful. According to the Oregon Capitol News, this is what taxpayers in The Beaver State can look forward to:
On a 17-12 vote nearly down party lines, senators approved a measure which would change the way Oregonians receive their “kicker” refund. Currently, taxpayers receive a check from the state government in December if the actual tax revenue collected by the state was more than two percent above the amount allocated in the approved state budget. With the bill, Oregonians instead will receive tax credits equal in dollar amount to the checks they would receive under the current system.
It is almost a law of nature that if government ends up with unexpected cash in its coffers, politicians will spend it as fast as they can. Recognizing this phenomenon, Oregon voters put a measure in place back in the 1980s that forces the state government to refund its budget surplus to taxpayers, over a defined threshold.
The change in the way that the “kicker” is refunded has sparked some debate in Oregon, with some concern that it will be easier to repeal the “kicker” if it comes in the form of a tax credit and not a check. The real question with Oregon’s budget surplus refund, however, is not in what form it should come, but whether or not it is a workable measure to control the size of state government.
From a taxation point of view, it looks like the “kicker” has worked. Since its introduction, Oregon has fallen in the Tax Foundation’s high-tax ranking, from a place in the top-ten to somewhere between 15 and 20 over the past decade. Presumably state legislators have been increasingly reluctant to raise taxes, knowing that if they collect a certain amount of revenue, they will have to relinquish it anyway. This moderate taxation policy has also contributed to Oregon’s relatively strong growth over the past 20 years.
When it comes to state spending, however things do not look as bright. State spending data from the National Association of State Budget Officers shows that over the past ten years alone, Oregon’s state govermnet has increased its outlays by a whopping eleven percent per year. This increase far exceeds the 3.9 percent growth enjoyed by the state’s economy over that period. In other words, despite the “kicker” tax refund mechanism, state government has significantly increased its share of Oregon’s economy.
If the only long-term effect of the “kicker” were to keep taxes in check, then Oregon has benefited from the measure. But if the goal is to prevent excessive growth in government spending, Beaver State taxpayers need to find another measure – preferably one that defines what the essential functions of government really are.
The debate over Oregon’s kicker is not likely to die any time soon. It has been criticized from the left for benefiting high-income earners and corporations over poor families. Such criticism disregards the fact that Oregon has five income tax brackets, between five and eleven percent, that place a disproportionately large tax burden on high earners. But it also shows that the real issue at stake is, again, not in what form Oregon taxpayers should get excessive taxation back, but what role government should really play in their lives. The leftist kicker critics evidently want government to redistribute more income; kicker backers seem to want to keep the role of government limited one way or the other.
Until the spotlight is focused on the question of the essential functions of government, the debate in Oregon will most certainly continue.
