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Wednesday, May 25, 2011

"Kicker" checks getting the boot

The opponents of Oregon's income tax "kicker" laws, whereby excess tax revenue collected by the state gets refunded to the taxpayers, have won an important victory. Unless Governor Bluejeans vetoes it, a law has been passed that turns the biennial "kicker" check into an income tax credit.

Eliminating the checks is being billed as a way of saving administrative costs, which is true, but it's also a first step toward getting the "kicker" repealed. Everybody understands a check, but when you start talking to the average taxpayer about credits, his or her eyes immediately glaze over. The credit program will garner little of the enthusiastic support that the "kicker" checks enjoyed. The next time the voters are asked about it, they may be sufficiently apathetic that the "kicker" may be eliminated once and for all.

Not that there's anything wrong with that.

Comments (14)

It's my money, you took too much of it, and I want it back!

The theory is that the unwashed won't miss what they don't get.

Nice to have legislators who represent the people.

I think the problem with the whole kicker structure is that is based on PROJECTED revenue, rather than ACTUAL revenue. Fix that and the problem would be solved.

Still no observation, already a day late, on this blog of a temporal landmark -- the entrance into his eighth decade upon the planet of Mr BD, who might have had something to sing about this matter and may have written it decades ago:

"I'm on the pavement
Thinking about the government
The man in the trench coat
Badge out, laid off
Says he's got a bad cough
Wants to get it paid off"

Steve: I think you have it exactly right. If people don't actually receive their refund in the form of a check, they won't miss it as much. Can you imagine what it would be like if taxpayers had to write a check to the government every month rather than have the money withheld from their paycheck? But since it's just automatically withheld, it's out-of-sight, out-of-mind.

Really, what this is all pointing towards is that we should have annual budgets. Both our unanticipated shortfalls and our kicker problems have much to do with the fact that it's nearly impossible to adequately estimate revenue two years out.

Personally, I thought the idea of writing checks to the taxpayers was a ridiculous expense. Knowing I have money coming back to me in the form of a credit on my taxes a mere two months later is certainly no great sacrifice. (Assuming checks were mailed in December at a cost to the state of almost $1Mil and that by Jan. 30th all the 1099's etc are in hand.)

Most friends and family know that repealing the kicker will give the state carte blanche to increase spending. They also understand that we do not need to be wasting the better part of a $million to write checks to undisciplined, impatient taxpayers.

As I read the bill, the bad thing about making the kicker a tax credit is that you must have a sufficient tax liability in a future year to get the kicker credit.

The good thing about it is that the credit keeps moving forward to succeeding years until it is fully utilized.

However, the kicker credit will be applied, in most cases, before other credits the taxpayer might have. If any of those other credits are expiring without sufficient tax liability, then they will be lost.

See HB 3543A for details. Correct me if I'm wrong.

I think the key is whether the credit is refundable. If it is, then people will still get attached to it. That's the teaching of Colorado's "Taxpayer's Bill of Rights," which is similar to the kicker, but refunds are paid as refundable tax credits. Plenty of people without a tax liability know to file a return and claim their money in refund years. True, the voters approved a temporary suspension of the refunds during beginning of the budget crisis in the mid-2000s, but a lot of people howled in protest.

The democrat/union owned state has been scheming for years on how to renege on this law. It is a crusade that will never die. It is not about spending a million dollars on postage stamps once in a while. This is their way of getting what they want by poisoning the well. "If we can't have it then neither can you." You could write a book on the waste and spending spree that happens at the state level. Maybe someday someone will. How will us dumb taxpayers know when we can use that "credit"? Will they spend 5 million dollars on a TV campaign? Or maybe they will send us a letter! Dough!

I think the key is whether the credit is refundable.

The credit does not appear to be refundable. According to the bill:

If…an amount of the credit remains unused, the remaining amount shall be carried forward and applied against tax liability…in the succeeding year.

…any amount continuing to remain unused shall be carried forward and applied against tax liability in a succeeding tax year until all remaining amounts of unused credit are offset against tax liability.

Since the "remaining amount" is carried forward, if a person dies does the remaining amount become the State's or does it go to the estate?

Since the "remaining amount" is carried forward, if a person dies does the remaining amount become the State's or does it go to the estate?

If a final return were filed for a taxpayer in a “kicker year”, the taxpayer would not receive a credit. This could occur if the taxpayer dies, moves out of the state or for whatever reason is no longer obligated to file a tax return.

I believe, the personal income tax kicker has been paid eight times since it’s start 1979 and the corporate kicker three times. It was suspended in 1991 for the personal income tax and in 1993 and 2007 for the corporate excise tax.

"would not receive a credit", how many of us thinks that's fair? Many times in later years people sell homes, businesses, etc. with larger capital gains, pay huge taxes, then if they happen to die a certain year when a kicker becomes a tax credit, the State gets it, and not the Estate. But then Oregon wants to tax the heck out of the Estate too. Can't win can we?

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