Oregon tax policy: It’s time to repeal the kicker

I have to admit to surprise over yesterday’s vote that passed income tax increases. Oregonians don’t generally like to raise taxes and historically vote against increases in income tax.  That one is past, and now it’s time to get real about Oregon’s tax policy.

It is often said of families that all are unique and strange. I suppose the same is true for the various states and how they fund their operations. Oregon is its own place. We don’t have a sales tax and won’t anytime soon. We rely heavily on income tax to fund our state’s services, and we have capped taxes on real property so that property owners’ tax levels are limited.

There is one other unique feature of Oregon tax law, and that is the kicker. The kicker is a provision in the Oregon constitution that requires return of income tax revenues collected that exceed the revenue forecast by more than two percent.  Oregon Constitution, Art IX, Sec. 14(3).  So in the years in which the Oregon economy hums along, many people work, and we all earn well, Oregon’s is adequately funded by tax revenues.

But what’s missing is any planning for the lean times.  They are inevitable, as anyone who is cash strapped or unemployed  in this recession can tell you.  Under the Oregon kicker, we empty the treasury in the good years and don’t set aside money for the bad ones.

It’s a policy that ignores every wisdom teaching in Western civilization. Through Aesop’s fable of the Ant and the Grasshopper, we teach our children to plan for the lean times. The same message is found in the Bible’s narrative of Joseph (Genesis:41), who advised the Pharoh to collect and save excess grain to prepare for the lean times.

I imagine that the same teachings exist in virtually ever wisdom tradition, regardless of religion, culture, or location. And if you doubt that these are lean times, come wander the streets of downtown Portland, or talk to the people who work on food scarcity in Lane County, or look at this snapshot homeless Oregonians from a day in May.  Those basics of food and shelter don’t even get us to class sizes for K-12, protection of kids in foster care, or the staggering cost of college education at Oregon’s public universities.

Fortunatley, I’m not alone in my thinking.  In this op-ed piece in today’s Oregonian, two prominent Oregon republicans, Lane Shetterly and Tony VanVliet, share their take on the need for a rainy day fund.  Interestingly, they wrote the piece before the historic vote on Measures 66 and 67.  They call for a constitutional amendment that would take excess revenue collected above the forecasted amount and put it in a rainy day fund. They point out that the concept of a rainy day fund has broad support among republicans and democrats.

It’s a breath of fresh air because it takes fiscal responsibility seriously and writes it into the constitution. They are spot on.

There are those who will say, “But it’s my money,” or “But I don’t trust the government and don’t want to give them more money to waste.” Those concerns are real, but they miss the mark. We have to plan for the days when income falls because we all know that the thin days will return.  As long as we’re committed to an income tax as the means through which we fund our state, we would do well to follow the wisdom of Aesop and Joseph and plan for the lean days.

Without changes, our seniors, kids, and those who have fallen on hard times will always be at risk in these lean days come.  We are better than all that, aren’t we?

David Sugerman

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