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Entries in sales tax (2)


State Taxes, Volatility and the Kicker

Oregon's tax revenue system is slightly more volatile than the all-state average, but less than some critics think based on a new study by Pew Research. One volatile element not included in the Pew assessment is the personal income tax kicker, a unique and quirky procedure that rebates to taxpayers money that exceeds projected revenues by two percent or more.

According to Pew, Oregon's state tax regime volatility rating is 6.4 percent, compared to an all-state average of 5 percent. The most volatile state tax regimes are ones heavily dependent on severance or extraction taxes. Alaska has the most volatile state tax system at 34 percent.

Oregon depends heavily on personal and corporate income tax revenues, which rise and fall in concert with broader economic trends. When times are good, Oregon's income tax system generates a growing pot of money.

If times are too good, Oregon's personal income tax kicker is triggered, requiring a chunk of incremental revenue to go back to taxpayers.

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Time Short to Launch Tax Reform Debate

Governor Kitzhaber is talking privately about tax reform, but the time has come when conversations about what reform looks like must go public.Democratic Senator Ginny Burdick surprised many political observers when she came out against Our Oregon's proposed 2012 ballot measure directing all corporate kicker refunds to K-12 education. Our Oregon, the political arm of Oregon public employee unions, proceeded and successfully placed its initiative on the November ballot.

What was surprising is that Burdick had supported past Our Oregon proposals, such as Ballot Measures 66 and 67 in 2009 that raised income taxes on corporations and wealthy individuals. Burdick didn't criticize the substance of what Our Oregon was doing. She was unhappy because it wasn't a more comprehensive tax reform proposal. Burdick told Willamette Week, “All I can hope is, it doesn’t make the ballot. It will throw a monkey wrench into real financial reform.”

Burdick and other leaders believe only dealing with the corporate kicker will take the wind of out the sails of a larger discussion on restructuring Oregon's tax system, which relies heavily on income taxes that can sag when the economy tanks.

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