New Kicker news, decoding odd economic forecast

By Taxpayers Association of Oregon

The State Economist predicted a possible new Kicker Income Tax Refund by 2026 based on latest projections. There is also some very mixed news on the economic forecast.   To explain it all we provide some quotes from the official State Forecast report followed by our translation of what it means.

State Economist: “Growth in personal income tax collections have outstripped expectations somewhat in recent months.”

TRANSLATION: Higher wages boosted state revenues which may trigger another Kicker Tax Refund. The wage increase in our view was due to companies being forced to pay high-as-possible wages to deal with inflation and to pull themselves out of the massive 5-year long labor shortage crisis (by over-paying to hire new workers).   Oregon’s surprising wage growth is not driven by robust prosperity as much as sheer desperation.  Remember, Oregon was among the few states that decided to continue to pay people more to NOT WORK than work during the pandemic.   This forced businesses to out-bid free government hand-outs in order to win workers off the couch and back into working again.  Also, the first population decline in 40-years in Oregon (caused by high taxes and high crime, thank the liberals) further made the labor shortage even worse, forcing businesses to pay even higher wages to find workers from a shrinking labor pool.

State Economist:“growth in personal income tax withholding will slow in the months ahead”

TRANSLATION: Tax revenue is increasing beyond expectation but may slow down because it does not look like an enduring healthy growth cycle.

State Economist: “As a result of the growth in personal income taxes and other General Fund revenues, it is now expected that non-corporate General Fund revenues will end the biennium 2.5% above the Close of Session forecast. Should this be the case, a kicker credit of $582 million will be generated for the 2025-27 biennium. However, there is still the April 2025 tax season yet to come, leaving a future kicker credit a fifty-fifty propositon at this point.”

TRANSLATION: If it does grow at this pace then a Kicker Refund will kick in 2026.

State Economist: “Estate tax collections are also increased noticeably… collections continuing to come in above forecast… strong estate tax collections are largely driven by a small number of very highly valued estates.”

TRANSLATION: The budget is growing because people are dying and paying one of the highest estate taxes in the nation.

State Economist: “…the expected impact of the $5.6 billion personal income tax kicker being paid out to Oregonians did not show up in meaningfully larger video sales… It is an open question to what extent Oregonians did or did not change their entertainment spending in light of the kicker. Some may have needed to pay down debt,deal with inflation and higher prices on necessities, or simply saved the money for a later date.”

TRANSLATION: State economist predicted that the huge $5.6 billion Kicker refund back to taxpayers would cause people to spend their refund on lottery and other entertainment activities as in the past … BUT THEY DIDN’T DO IT THIS TIME AROUND.  Instead people used their Kicker Income Tax Refund to survive tightening economic conditions.  They spent it on credit card debt, car/house payments and dealing with higher grocery prices.   This means the average Oregonian is feeling pain in their pocketbook.

State Economist:“Revenue growth in Oregon and other states will face considerable downward pressure over the 10-year extended forecast horizon… revenue growth will fail to match the pace seen in the past.”

TRANSLATION: Oregon experienced record breaking tax revenue growth for nearly 15 years and your State Government spent everything that came in and is now not prepared to go on a diet if taxpayers do not continue to produce record breaking progress and fork over record breaking tax payments.  We are screwed!

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