The dire predictions didn’t come true. Legislative Democrats did not steal Oregonians’ income tax kicker.

Or, legislators lost a grand opportunity to invest in Oregon. Instead, wealthy taxpayers will reap a financial bonanza.

And so the debate rolls on.

Almost every legislative session, including this year, liberal groups and Democratic allies find ways they’d like to spend the “2% kicker” instead of refunding the money to taxpayers. And every session, conservative groups and their Republican allies warn that Democrats are about to grab the kicker dollars for a spending spree.

Here are five nagging political questions about Oregon’s kicker, which is unique among the 50 states.

1. Was the kicker in danger from the 2023 Legislature?

Never. House Speaker Dan Rayfield, D-Corvallis, told me early on that messing with the kicker was not on the table.

In February, Sen. Daniel Bonham, R-The Dalles, wrote to constituents that Gov. Tina Kotek “assured me that she would steer clear of stealing the kicker. The Democrat-controlled legislature needs to do the same.”

Kotek reaffirmed her stance in May.

2. What about Democrats’ proposals to divert the kicker?

They died. Survival needed the backing of Speaker Rayfield and Senate President Rob Wagner, D-Lake Oswego, which never was in the cards.

Two measures received belated public hearings on May 31 but were still sitting in the Senate Finance and Revenue Committee when the Legislature left town on June 25. 

Sens. Lew Frederick and Kayse Jama, both Portland Democrats, put forth a state constitutional amendment, SJR 26. If approved by voters, it would have ended the kicker distribution to taxpayers and would have directed the money to K-12 public education.

Sen. Jeff Golden, D-Ashland, proposed SB 502 as a permanent way to finance wildfire prevention. It would divert part of the kicker to a new Oregon Wildfire Mitigation and Adaptation Fund, whose investment earnings “shall be used solely for the purposes of wildfire mitigation and community adaptation to wildfire risk.” Each taxpayer also would receive a $1,000 payment, regardless of how much income tax they paid. 

Some proposals didn’t even get an airing in the Legislature. Rep. Ken Helm, D-Portland, introduced HJR 23 and HB 3468 to establish the Oregon Drought Reserve Fund by taking money from the kicker. Lower-income taxpayers still would receive the tax credits, which would be reduced for higher-income folks.

Through HJR 21, Rep. Ben Bowman, D-Tigard, sought voters’ approval to simply divide the kicker equally among all eligible income taxpayers. 

The progressive Oregon Center for Public Policy advocated for that idea of a “Working Families Kicker” – a redistribution of the refund so lower-income families got more at the expense of higher-income families. The concept was to “send every Oregon tax filer an equal amount, resulting in most Oregonians getting bigger tax rebates, helping families make ends meet.”

Back when the upcoming kicker was projected to be $5.54 billion, advocates estimated that each taxpayer would receive $2,450, compared with the current percentage-based system that would provide $1,000 for the typical Oregonian, $70 for the lowest-income Oregonians and $53,400 for the average taxpayer in the top 1% of Oregon income.

3. Is the current kicker fair?

All taxpayers get the same percentage of their taxes back. The latest kicker is projected as a 45% refund of their 2023 taxes, whereas the kicker two years ago was 17.34%. State economists expect the kicker to amount to $5.61 billion, although that won’t be finalized until Oct. 1.

“It really does seem dramatic here in terms of the differences in this kicker credit across income tiers in Oregon, where really the vast majority of the credit goes to higher-income filers,” State Economist Mark McMullen told the House Revenue Committee on Aug. 30. “Now, that’s not necessarily unfair, given that the percentages are the same. What it reflects is that Oregon has a progressive tax system and that the higher-income filers had a lot more [tax] liability in 2022 than lower-income filers.”

The typical Oregon taxpayer, whose income is between $35,000 and $40,000 should get a $980 credit after filing their 2023 tax return. For a tax return in the bottom 20% income bracket, the average credit would be $60. The top 1% of Oregonians, who have incomes above $466,700 and who pay higher tax rates, would each receive more than $44,000, according to the economists.

4. Why do we even have the kicker?

It is among steps the 1979 Legislature took to blunt – unsuccessfully, as it turned out – the taxpayer revolt moving north from California. The kicker aims to restrict spending by stopping the state from using money it didn’t expect.

Every two years, state economists estimate how much General Fund revenue the state will receive during the upcoming biennium. If the eligible revenues exceed the estimate by at least 2 percent, “the total amount of the excess shall be returned to personal income taxpayers.”

Critics say the 2% kicker deprives government of money for schools and other needed programs. Supporters say the kicker acts exactly as intended, limiting spending.

5. What about Republican legislators?

Republicans could block any tinkering with the kicker because Democrats would have needed their support. Changing or suspending the kicker requires a two-thirds majority vote of the Senate and House.

The upcoming kicker will be returned to taxpayers who filed a 2022 tax return, and paid taxes for that year, through a credit on their 2023 state personal income tax return. The Democratic majority ignored SB 990 from Senate Republican Leader Tim Knopp of Bend. The legislation would have sent the kicker money back to taxpayers sooner, via checks as formerly was done, instead of as a credit on their state tax return.

“While Oregonians still face high costs of food, fuel, child care and rent – all of which are necessary to live, work and raise a family – the state continues to bring in record revenue. Thanks to the personal kicker, Oregon taxpayers will get some of their taxes back and with it, a well-deserved break from the persisting burden of inflation and high costs,” Knopp said in February, urging support for SB 990.