Laugh Out Loud at Kicker Vote

LAUGH OUT LOUD! LOL! LOL! That’s the common parlance for “laugh out loud” on the internet and wireless text messaging. And now, appropriately, it is descriptive of how we should feel about the latest gyrations to raise taxes at the legislature. And there are plenty of people to laugh at.

You will recall that, two weeks ago, my column dealt with the Democrats plan to raise taxes on business by eliminating the kicker (the tax refund due taxpayers for taxes paid in excess of revenue requirements to fund state government in the past biennium). The Democrats happily trotted out Portland’s big business elites in the form of the Portland Business Alliance and the Oregon Business Association to demonstrate “business support” to raise taxes to fund the “rainy day fund.” Raising taxes isn’t usually funny business but in this case it is absolutely hilarious.

Let’s start with my team — the Republicans. The Republicans held a majority in both houses for a decade. They had all the leverage in the world. And yet, despite that leverage, the Republicans could not, would not, forgot to — you pick — enact any meaningful tax reform for individuals and small businesses. In particular, even though the state was awash in growing tax revenues due to America’s soaring economy and Oregon’s high tech boom, the Republicans failed to address a capital gains tax that discourages investment, growth, and retention of businesses in Oregon. Similarly they failed to address a burdensome inheritance tax that forces small businesses and farmers and ranchers to saddle family owned businesses with additional debt to pay taxes on the privilege of transferring those businesses to family heirs. Now the Republicans are in the minority. And yet, they managed to out maneuver the Democrats and force them to accept a reduction in inheritance taxes by doubling the amount of the estate exempt from taxation as part of a package to create the rainy day fund — a good start with more needed to be done. Heck, if the Republicans had only known it was this easy when you are in the minority, they may have given up majority status years ago.

Then there are the Democrats. While in the minority, the Democrats forced adoption of the two largest tax increases in the history of Oregon — both of which were subsequently defeated by an overwhelming vote of the people. But Democrats are never discouraged when it comes to raising taxes. Particularly on raising taxes on business. It came as no surprise that Governor Kulongoski announced at the beginning of the legislative session that his primary agenda included raising at least three taxes and that the Democrat controlled legislature jumped greedily on the bandwagon. Their first attempt was to ram through elimination of the kicker for businesses. They announced that it was needed to create a rainy day fund despite the fact that the state already had $2 billion dollars more for this biennium than for the previous. In a display of crass partisanship, they ignored the pleas of the Republicans and small business representatives to provide some other form of tax relief as a trade off. Then they failed. They got their behinds kicked. Despite their majority status in both houses they couldn’t muster enough votes to pass a key piece of their legislative agenda. There they were four years ago — in the minority — engineering the largest tax increases in Oregon’s history and now — in the majority — they couldn’t punch the ball across the goal line. If the Democrats knew it was this hard to be in the majority, they may never have given up their minority status.

But the biggest laugh is held out for the Portland Business Alliance and the Oregon Business Association — the Portland business elites. They dutifully supported the Democrat proposal despite the protestation of main street businesses — they always do. And now they are going to get their wishes but not in quite the way they wanted.

A compromise has been forced by the Republicans and small business representatives. The compromise will create a rainy day fund, paid for in part by elimination of the kicker — but only as to large businesses (you know, like the Portland Business Alliance and the Oregon Business Association). And small business will get to keep their kicker and get relief in the form of a reduction in inheritance taxes. The PBA and the OBA should know that if you play ball with the Democrats, they will take the bat and shove it up your noses. This one is too funny. LOL!