Corporate Kicker Reform - Dead or Alive? (Update: Alive!)

In order to suspend the corporate kicker, the Oregon House needed a two-thirds majority.  Instead, they got a party line vote, 31-26.  Democrats had hoped to scrub this year's kicker and put the $275 million surplus in a rainy-day fund.  That leaves Democrats with  another option:

Democrats said they now will take up the Senate plan and put a repeal measure before voters in May. Democrats have the power to do that because it requires only a simple majority in both chambers.

But the Oregonian is reporting that behind the scenes, talks are continuing:

But privately, leaders in both parties are talking -- so far without success, but still talking -- to try to find middle ground on a rainy day plan both parties can endorse. House leaders talked until late Tuesday and reconvened to continue discussions today.

Republicans, pleased to have spiked the Democratic plan, are on thin ice because the plan has broad support:

But business leaders and lawmakers say the state needs more reserves. Gov. Ted Kulongoski campaigned in 2006 with a promise to suspend this year's corporate kickers to help fund a new rainy-day fund, with the consent of business groups. The result was HB 2707.

Despite the bill's wide support from business groups, House Republicans have been holding out for more concessions, such as cuts in capital-gains taxes.

If the bill goes on the ballot, both parties have something to lose.  Republicans confront the risk of an outright repeal of the corporate kicker if it passes, while Democrats risk a costly political loss on an important issue shortly after winning the majority. 

Update: It seems that a deal has been cut. We'll update as details become available.

Update: Yup, there's a deal! From the O:

Legislative leaders announced late Wednesday that they have agreed to create a "rainy day" savings account with a one-time suspension of corporate kicker refunds - instead of asking Oregon voters to make the decision. The deal also calls for a tax exemption that will reduce small businesses' income taxes by about $25 million a year, Democrats and Republicans announced at 5 p.m. Other provisions include doubling the exemption on inheritance taxes from $1 million to $2 million and increasing the corporate minimum tax, now at $10, on a sliding scale that would set the tax between $25 and $50,000. ... The new plan combines elements of the Democrat and Republican plans from Tuesday.
Update: Here's a 10-minute video from the bipartisan briefing on the deal.


  • Patrick (unverified)

    Office of the Speaker

    Representative Jeff Merkley

    State Capitol, Room 269

    Salem, Oregon

    February 28, 2007

    Contact: Russ Kelley (503) 986-1210

    Media Advisory

    Media Briefing Today at 5:00 P.M. on Rainy Day Fund Deal

    SALEM—Bipartisan House and Senate leaders reached a deal today to establish a Rainy Day Fund for Oregon.

    Speaker Jeff Merkley, Senate President Peter Courtney, caucus leaders from both parties and both chambers, and the chairs of the House and Senate Revenue Committees will brief reporters at 5:00 p.m. today in Hearing Room 174 in the Capitol.

    WHO: House Speaker Jeff Merkley

            Senate President Peter Courtney
            Bipartisan House and Senate Caucus Leaders
            House and Senate Revenue Committee Chairs

    WHAT: Briefing on Rainy Day Fund agreement

    WHEN: Wednesday, February 28th

                5:00 p.m.

    WHERE: Hearing Room 174, State Capitol

  • (Show?)

    Just received this via email....

    Statement from Governor Ted Kulongoski on Today’s Rainy Day Fund Agreement:

    “Today’s a great day for Oregonians who care about stable funding for essential services and a more fair tax structure for our working families. “Let me be the first to thank both the Democratic and Republican legislative leaders for their commitment to put Oregon on the path to fiscal stability and tax fairness. “House Speaker Jeff Merkley, Senate President Peter Courtney, House Minority Leader Wayne Scott, Senate Majority Leader Kate Brown, House Majority Leader Dave Hunt, Senator Ryan Deckert, and Representatives Phil Barnhart, Dennis Richardson and Bruce Hanna put aside their differences and came together on an agreement that puts the interest of the citizens above partisan politics. “Tonight Oregonians’ call for a general purpose rainy day fund to protect their schools, human services and public safety was answered.”
  • (Show?)

    Its moments like this that restore my faith in the political process.

    My sincere thanks to both sides of the aisle for re-introducing a word into the political vernacular... compromise.

  • Patty (unverified)

    This. is. fabulous.

    And it goes to show what you get when Democrats are in charge: We get real progress on the issues that matter to Oregonians - tax fairness and stability for our schools and other basic services. After years of waiting, we finally have a real rainy day fund and corporations are going to pay more of their fair share...and it's not even March 1st.

    This NEVER would have happened if the Rs were still in charge of the House. The Dems have set the agenda and are negotiating well. They are moving forward a legislative package that will make real people's lives better. They deserve kudos.

  • Blue Voter (unverified)

    This shows that it DOES MATTER who is in the majority.
    Yes, both sides compromised, but the leadership led. In prior years Republicans, under Republican leadership, couldn't deliver their own estate tax change. The most important thing in all of this was who held the gavel in the house. Democrats are in charge. Things are getting done. The environment for compromise for the common good exists ONLY because of the leadership change.

  • Lee (unverified)

    "Despite the wide support from business groups" doesn't include most business owners of Oregon, since our businesses are mostly small business owners like myself. Most businesses of Oregon (including the "underground businesses) are not members of business groups. I think it would be appropriate to let the voters of Oregon determine a "compromised" measure because this is a substantial tax increase and the tax appropriations are controversial.

  • Jesse B. (unverified)

    Hurray! A one-time suspension of the corporate kicker for $25 million a year in small business taxes and another million dollars in exemptions for the Paris Hiltons of this world.

    Good thing we're increasing the corporate minimum tax... to $25 dollars.

    Should have let this one go to the voters.

  • (Show?)

    So does this mean there is only a one time suspension of the corporate kicker, and not a permanent repeal?

    I think this is a good deal, but I would also like to see two separate ballot measures on the ballot. One to repeal the corporate kicker and dedicate it to the rainy day fund.

    Another to do the same for the personal kicker.

    Or, failing that, raise the threshold that triggers the kicker from 2% to 5%.

    2% is barely even a rounding error.

  • (Show?)

    Hey, anybody know what happens if Oregon goes to annual sessions--does the budget guess become an annual affair? That would certainly help limit the damage of both corporate and personal kickers. Just wondering.

    Nice work, Ds--low hanging fruit, whoo hoo!

  • BlueNote (unverified)

    Congrats to Dems who made good choices on this issue. As I have said in other posts, an election on this issue could have been very costly to Dems and their new majority, so discretion was the better part of valor, as my mom used to say.

  • (Show?)

    Good thing we're increasing the corporate minimum tax... to $25 dollars.

    Jesse B, you're wrong. The corporate minimum now becomes a sliding scale. The $25 level is only for C-corporations with Oregon sales of $50,000 or less. (And frankly, it makes no sense to be a C-corp if you've got $50,000 in sales.)

    The new corporate minimum tops out at $50,000 for the companies with the highest sales.

    Lee wrote: this is a substantial tax increase and the tax appropriations are controversial.

    No, it's not a tax increase. It's suspension of a automated tax refund. If state economist had made a more accurate guesstimate, there wouldn't be a kicker.

    Seriously, Lee, that's like suggesting that a restaurant owner is obligated to reduce his entree prices because he got a good deal on yesterday's seafood shipment.

  • Jesse B. (unverified)

    Forgive me for being condescending, but does anyone see my point? If the Republican leadership really wanted to try to block this thing I don't see why we had to give all of this up to get it. After all, the Governor was elected by 8 points on all of these things, not mention majorities in both the House and the Senate.

    I think voters were pretty clear. If we really wanted more tax exemptions for Paris Hilton we would have elected a Republican majority and it would have been Saxton 50, Kulongoski 42.

  • DisgustedDemocrat (unverified)

    Our three Democratic "leaders" have completely failed us once again. But in the last few years I have come to expect that they really are not capable of anything more than that. Time and again they have shown themselves to be some of the most pathetic, incompetent leaders we have had in a long, long time.

    The utter lack of guts and integrity in this sellout, and the audacity to think we actually are stupid enough to believe this is a great day for Oregonians is disgusting.

    We should have taken this to the ballot and made the case to the voters. That is what leadership is about, that is how respect is earned, and that is what it is going to take to turn our state and our country around. If the consequences of this failure of leadership weren't so serious, the attempts of a lot of leader wannabees here to spin this would be amusing. As it is, they are just juvenile and sad.

  • (Show?)

    Posted by: Lee | Feb 28, 2007 9:10:40 PM

    It isn't a tax increase.

  • klong (unverified)

    I think it's a start. There is still the initiative process to repeal the corporate kicker.

    I don't think raising the inheritance exemption from $1 million to $2 million is for "Paris Hilton's of the world." If you have retirement savings, life insurance, a paid-off house. All these things can easily add up to $1 million.

  • (Show?)

    I don't see why we had to give all of this up to get it.

    Give up what? The Democrats won on all counts - except boosting the inheritance tax by $1 million.

    (And that's not really that big a deal -- a $2 million exemption is already federal law. And the Dems stuck to their guns on NOT tying the state exemption to the federal one; so if the feds move up, we don't.)

    It's a huge net win. Remember, the corporate kicker is a one-year suspension, but everything else is permanent -- including the jacked-up corporate minimum.

    I saw Rep. David Edwards tonight at the Washington County Democrats - and I'm pretty sure he said that this is a net gain of $100 million in revenue.

    That's HUGE.

    Y'know, when my favorite football team plays my least favorite team, I like to see a 42-point smackdown. But when we win by "only" 21 points, I still celebrate after the game.

    Let's not piss all over the place because the Democrats got almost everything they wanted.

    And as Klong points out, no one has taken the permanent corporate kicker ballot measure off the table.

  • DisgustedDemocrat (unverified)

    Contrary to what Kari, klong, and the rest of the cheerleaders want to deluded themselves into believing, this is a huge loss for Democrats because once again it is a loss for what the party supposedly stands for.

    First, I suspect a number of folks who agree with him and klong actually do abstractly understand that the vast majority of working people in this state (and country) do not have a net worth subject to the current inheritance tax of anything near $1million dollars. The problem is their own arguments and lack of concern really does suggest that the reality of their world and values is that a $1million dollar estate really is not that large to them. This may be mixed in with a little bit of the childish, selfish, "it's mine" mentality that has come to be the dominate motivation of the baby boom and their children across the political spectrum in all matters of governance. Whatever the reason, Democrats used to stand up for, and with, the majority of our citizens against the increasing concentration of wealth and power in this country, including inherited, unearned wealth, because it rots the very foundations of our representative government.

    Second, if this compromise sticks, our failed "leaders" apparently have prevented the voters from having their say on the corporate kicker refund question at all for now. What has really happened here is that our spineless Democrats actually colluded with unprincipled Republicans to protect the interest of large corporations from serious kicker reform by distracting the voters with the shiny object of a 1-year tax charge. To those interests this 1-year charge is little more than a minor cost of doing business.

    Finally, only an idiot or a liar, which the evidence leaves us little choice but to conclude describes our three "leaders", would claim anything passed in legislation is "permanent". The so-called "permanent' components of this compromise are no more "permanent" than the 1-year kicker because hey could be changed by the legislature at any time in the next session. They even could be changed before the final deal is struck. Quoting from today's Oregonian:

    Senate Minority Leader Ted Ferrioli, R-John Day, didn't participate in the negotiations and said the deal is encouraging. But he cautioned:

    "The devil's in the details. . . . Now we all need to take a deep breath and look carefully at the substance."

    Even this relatively paltry $100mil corporate tax "increase", in large part is leveraged on the easy compromise of a supposed net shift of the tax burden up the income scale off the smallest businesses. Crowing that any of this is permanent and a major win is a fraud.

    What the cheerleaders here don't have a clue about is that this is not even close to a true victory because, supposedly, Democrats got almost everything they wanted. Rather this is a serious loss for our state and good governance because our Democratic leadership, and those who agree with them, actually believe this is even close to what the party should stand for.

  • (Show?)

    I kind of doubt that DisgustedDemocrat is actually a Democrat, or has ever voted for a Democrat. Sounds more like an ultra lefty third party type. No way they will ever be happy with anything.

    Talk about seeking the glass as half empty.

  • (Show?)

    I was overjoyed reading this in the morning O, after feeling intense frustration reading yesterday's description of the moronic deadlock. It is very heartening to see the Legislature actually doing what they're elected to do for a change, especially given the insignificant differences between the two parties' solutions.

    If completely straight-forward issues like this need to be sent to the ballot, why bother to have a Legislature at all?

  • (Show?)


    What part of 36 votes for a 2/3 majority don't you understand?

    The citizens of Oregon put the Democrats in charge in order for the legislature to get out of the partisan slime pit they have been languishing in for the last sixteen years...

    Politics is the art of compromise, not the slash and burn policies of the past GOP majorities, and the ruthless "rule" of Queen Minnis.

    It's the citizens of Oregon who are demanding sensible politicians.

    Yesterday, they were given an insight into what can happen when politicians work for "better" government, instead of single issue stalemates.

    It's a breath of fresh air, breath it in and savor it.

  • (Show?)

    "What part of 36 votes for a 2/3 majority don't you understand?"

    that 2/3 of 60 is actually 40? :)

  • LT (unverified)

    36 is 60% and 2/3 would be roughly 66%

    The legislative supermajority for raising taxes was sent to voters by the 1995 legislature. Maybe that should also be up for discussion? Extra points: who was Sen. President in 1995? Look up HJR 14 of the 1995 session and see if you recognize any of the names on the bill.

  • DisgustedDemocrat (unverified)

    It's amusing when people like zman start questioning who is a Democrat. I think the fact that people like him don't even recognize the core Democratic party values of the working class base, speaks volumes about the decrepit state of our party. For the record, in the several decades I have been old enough to vote, I have voted in every election and I have never voted for a Republican or a third-party candidate. Only once have I voted for an independent candidate, and only because of his views and the fact he was endorsed by some major national Democratic figures. And in more than one election cycle I've donated to the maximum or near the maximum to Democratic candidates. You are an idiot zman.

    And Mark, what I know about 2/3 is that real Democratic leaders, unlike the pathetic group we have now, would make it their mission to fight for the support from voters it takes to pass a ballot measure or improve our numbers in the legislature. There is a big difference between that kind of principled stand for values and what some low-life Republican whackjobs have done over the last several years. I personally find it hard to savor the stink of a voluntary loss like this, particularly when the governor has the nerve to get on the radio and talk about this "success", clearly believing some of us are stupid enough to buy it.

  • Lee (unverified)

    Kari, if you want to equate the kicker to a dining experience it is like going to a nice Pearldom restaurant, looking at the menu, ordering a $29 dollar entree, then when the check comes the waiter tells you that while you were dining they had a wholesale price increase on the "piddlecrab legs"- your entree bill is now $32. Whether the kicker bill is just for one year or forever, that is a tax increase. Bottom line. A commoner and not a tax expert.

  • Merilee Karr (unverified)

    I sent this letter to the Oregonian today:

    Dear Editor:

    If you think the Legislature’s compromise on the corporate kicker is a “stunning turnaround,” your reporters aren’t doing their jobs.

    Allowing the kicker for “small corporations … that sell less than $5 million inside Oregon” means Intel qualifies. Multinational corporations use their Oregon facilities to make goods sold mostly elsewhere. Even sales in Oregon don’t count if the product was sold to an out-of-state distributor first.

    According to The Oregonian’s own reporting, under the Instate-Sales-Only, or ISSO, method of corporate income tax calculation adopted by the last Legislature, Intel’s instate sales are probably zero. That’s because Intel sells its computers to national distributors, not directly to customers. Last week’s “bipartisan breakthrough” will send this “small business” a kicker check, and qualify it for the lowest bracket in the new corporate minimum tax.

    No, dear Editor, it’s not stunning, and it’s not a turnaround. It’s business as usual.

    Merilee D. Karr
    Tax Fairness Oregon
  • Rich Land (unverified)

    And if Intel's Oregon sales ARE zero, it's kicker check will

  • Merilee Karr (unverified)

    Good question, Rich.

    Intel's kicker check will be low, but not zero, because the kicker is a percentage of the tax paid. Intel is probably paying the minimum corporate tax, or close to it.

    The real injustice of ISSO is in the calculation of corporate taxes. Taxing multinational corporations just on their instate sales makes as much sense as taxing them on how many cracks in the sidewalk their executives step on. The state still has to build roads, educate employees, and pipe water that the corporation’s factories will use to make all the widgets they sell out of state.

    Basing kicker eligibility on instate sales adds insult to injury.

    Sincerely, Merilee

  • GT (unverified)
    <h2>Hey, I want to ask a question... Just how much do you think the government really needs to collect in taxes? 20% of our incomes? 30%, why not 100%? They seem to always come up with ways to waste more and more money but they never tell us exactly how much they really need. Greedy idiots.</h2>
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