I recently wrote about the fundamental inequity in distributing Oregon’s kicker tax refund based on the amount of taxes paid. We all know very wealthy people have big tax bills (usually). This does not necessarily mean they deserve big kicker refunds which only serve to exacerbate the regressiveness of Oregon’s income tax.
The structure of the kicker refund was determined by a ballot measure. It could have been allocated in any number of ways. The writers of the ballot measure chose what we have now. A large percentage of the refund goes to the richest Oregonians, and only a ballot measure can change that.
We have all heard about how the wealth gap has widened into a chasm over the past few decades. Many Oregonians barely get by while the wealthy just get wealthier.
For struggling Oregonians, the kicker, small as it is for low- and middle-income people, can be a real help.
But for a sizeable number of Oregon taxpayers, the kicker makes virtually no difference in their lives. They already have no problem paying bills, buying nice homes, and taking vacations. To hand many of them five-figure kicker refunds, significantly draining the available kicker funds, is just wrong.
For a while, Oregonians have been able to direct their kicker refund back to school funding by simply checking a box on their tax return. I call on all fortunate Oregonians who are financially comfortable to check the box. While it would not flow directly back to the rest of us as cash, it would make a big difference in our schools and help all of us, even if indirectly.
Please step up. It is right thing to do.
The amount of refund should be based proportionaly on the amount of tax paid. The reason there is a kicker is that too much was collected.
Hello, Curtis,
Thank you for taking the time to reply!
Agreed that the purpose of the kicker is to return excess revenue to taxpayers. And doing so proportionately based on the amount paid seems fair. And it would be fair if the Oregon income tax were not so regressive.
In my commentary dated June 6, I show that if you include the federal payroll tax, most of which does not apply to income above $142,800 per year, a wage-earner making $50,000 per year has a higher effective tax rate than someone making $1 million. So, proportionally, the $50,000 per year earner actually overpaid more than the $1 million earner. True, the actual dollars are much bigger for the $1 million earner, but on a percentage basis, the $50,000 per year earner paid more.
I know the kicker is here to stay. It’s clearly very popular. The purpose of my commentary on this was to raise awareness of the fundamental inequities built into the Oregon income tax and to urge that upper income Oregonians make the choice on their tax returns to donate their kickers to the school fund. Such a choice doesn’t put any extra money directly into the pockets of lower income people, but it does help families across all incomes, even if indirectly.
Doug, I have to respectfully disagree with you on many of your suppositions.
You refer to regressiveness of the tax code, but your mixing federal rates with state. People earning $50K with a couple of kids and a mortgage probably pay little or no Oregon income tax and mostly Social Security and Medicare contributions at the federal level.
With over fifty phase-in and phase-outs, all penalizing high earners, the law is very progressive.
Not only do the wealthy pay the vast majority of Oregon and federal tax, Oregon does not provide a preferential rate for long term capital gains.
Low income folks use disproportionate more government resources for food, housing, and education.
There’s no shortage of discretionary funds for tattoos, piercings, smart phones and controlled substances.
Everyone should contribute something IMO.