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Don’t Kick the Kicker

Steve BucksteinQuickPoint!

Now that Oregon’s economy is finally showing signs of life, we are again hearing arguments against the so-called “kicker law.” The law states that whenever personal or corporate income tax collections are more than 2 percent higher than state economists project, the excesses are rebated to taxpayers.

Those who think government can spend money better than the individuals or businesses who earn it are livid that new projections show corporations receiving big rebates under the kicker law in 2007. The Oregonian editorialized this week that the state “ought to promptly abolish its corporate kicker.”

What corporate kicker critics fail to understand is that business income taxes are actually paid by individuals in the form of higher prices to consumers, lower dividends to shareholders, and/or reduced job opportunities and compensation to employees.

Corporations also make investment decisions in part based on the tax climate. Any income tax punishes success. It raises the cost of working, saving, investing and risk-taking. In our mobile age of instant communication, people, companies and their money are moving to locations where they can earn the best return on their investments of time and money.

The Wall Street Journal editorialized earlier this year that “Capital, jobs and economic development in America are migrating from high-tax states to low.”

Rather than abolish Oregon’s corporate kicker, we should talk about abolishing the corporate tax itself. That would send a strong message that Oregon is truly open for business.

Steve Buckstein is senior policy analyst at Cascade Policy Institute, a Portland, Oregon based think tank.

© 2006, Cascade Policy Institute. All rights reserved. Permission to reprint in whole or in part is hereby granted, provided the author and Cascade Policy Institute are cited. Contact Cascade at (503) 242-0900 to arrange print or broadcast interviews on this topic. For more topics visit the QuickPoint! archive.

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