Scott Bruun: Give Us Our Kicker, For Now

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Wednesday, February 25, 2015

Scott Bruun, GoLocalPDX MINDSETTER™

Let’s be honest, tax policy can be boring. That’s why when thinking about taxation, budget forecasts and Oregon’s unique “Kicker” law, I like to think in terms of spaghetti westerns.  

Imagine a young Clint Eastwood on a horse, dusty poncho swept back over one shoulder so you can see his holster and pistol.  It’s sunny – it’s a western, after all – so Clint has a hat on and he’s squinting.  He has one of those small, roll-your-own cigars in a corner of his mouth, and he’s staring down at a nattily-dressed townsman - a prim sort who looks like a banker, but could also be the town’s politician.  

And in his low, go-ahead-make-my-day voice, Clint says to the politician: “You can have my Kicker when you pry-it out of my cold, dead fingers.”

Oregon’s Kicker is in the news again, and it looks like we may get checks in the mail this year. If past is precedent, there’ll soon arise a host of Democrat lawmakers looking to stop this. Looking to finally rid our state of its pesky, tax-rebate non sequitur.  They’ll say that the Kicker is a quirky obstruction to the difficult biennial budgeting process, handicapping the state’s ability to respond to public policy priorities or save for rainy days.

At the same time Republican lawmakers, spaghetti western-style, will heartily defend the Kicker.  They’ll say the kicker is one of the few roadblocks to government spending run amok.  They’ll argue that Oregon’s citizens are already taxed too heavily, and would certainly benefit from additional income provided by the Kicker.  Republicans will defend the right of citizens to keep more of what they earn, while also suggesting that those same citizens will make wiser choices than lawmakers with the money.

Simply put, Democrats will argue that the kicker is dumb, Republicans will argue that the kicker is necessary.

Both are correct.

State economists use historical data to look forward two years to forecast tax revenues.  State lawmakers use the economists’ forecasts to build budgets and allocate monies for those same two years. The Kicker “kicks” when state economists incorrectly guesstimate future tax revenues.  If revenues exceed projections by 2% or more, the entire surplus is retuned to tax payers while state agencies and public education leaders are left to fill in the holes.

That’s the Kicker in a nutshell.  Or, as some lawmakers and agency-heads might say, that’s the kick in the nuts.

The Kicker is silly policy, but entirely fitting.  It is, after all, another silly component of a state with the silliest tax structure in the nation. That is to say, the worst tax structure in the nation.  

In Oregon we tax work, savings and capital investment at some of the highest rates in the country. When combined with property taxes and other local taxes, like Portland’s art and business taxes, Oregon stands out as the Sweden of America.  Yet even this comparison falls short as Sweden, years ago, finally realized that you can’t prosper and compete when you suffocate people with punitive tax rates.

We heavily tax the things we want more of, like investment in new jobs, then seem surprised when we fall short.  Our tax structure is broken.  And this is exactly why we should save the Kicker, for now.  Our broken tax structure gets worse whenever we attempt piece meal changes.  Kill the Kicker, and we’ll still have the nation’s worst tax structure.

Instead, it’s time serious leaders in Salem use the Kicker as one of the variables on the table for comprehensive reform.  Give the Kicker, get something in return.  Put everything out there, from income and capital gains taxes to property and consumption taxes, and parley.  Use all of Oregon’s tax pieces to build a new system that reduce burdens on workers, middle-class families, small businesses and yes, even large companies. You know, those large companies that employ tens of thousands of Oregonians and could, if we help them, employ tens of thousands more.

Imagine a state, Oregon, with a tax structure that actually promoted work, savings and investment.  A state with a tax structure that actually worked for working families, and didn’t need gimmicks like the Kicker to protect us.  

But that’s the future, perhaps way in the future.  So for now, we Oregonians should channel our inner-Clint.  When we get our Kicker check in the mail this year, we should cash it without compunction.  Sure, it may only be A Fistful of Dollars. But they’re our dollars.

Scott Bruun is a fifth-generation Oregonian and recovering politician. He lives with his family in the 'burbs', yet dutifully commutes to Portland every day where he earns his living in public affairs with Hubbell Communications. 

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