Oregon's corporate kicker never has made much sense from either a revenue or economic development point of view. Most of the goods and many of the services produced by Oregon corporations are sold outside the state. To the extent that corporate taxes are passed on to consumers, people from out of state help pay Oregon corporation taxes which, in turn, finance Oregon's biggest public expenditure - education from kindergarten to college. That is a significant source of revenue in a state with no sales tax to extract money from people who visit but do not stay.
Nor is there any requirement that the corporate kicker be spent in Oregon. Local managers are dismayed when their companies' kicker check goes to the home office out of state.
So we are not surprised that Associated Oregon Industries, the Oregon Business Association and the Portland Business Alliance are suggesting the Legislature not pay out the record $300 million corporate kicker this year and use it to create a rainy day fund to bolster volatile state income tax revenues in a cyclical economy.
Privately, business lobbyists say the deep cuts in the public school budget reported in the national media during economic downturns tarnish Oregon's reputation and makes recruiting capable employees more difficult.
Business lobbyists also realize failure to make some gesture to stabilize Oregon school finance now invites stronger measures later - an increase in corporate taxes, already among the lowest in the country, or repeal of the corporate kicker permanently. The Senate Revenue Committee already has voted to send a measure repealing the corporate kicker to the voters in May.
What is surprising is the reaction of the Legislature's Republicans to creating the rainy day fund. They refuse to go along with the plans of the business lobbyists. They are willing to withhold the kicker from "big corporations" but want to pay it out to companies with profits below $500,000.
This is pure politics. Republicans want to be able to tell their contributors they "did something" for small businesses. But there is no convincing evidence that many - certainly not all - small businesses with profits below $500,000 do not sell most of their products or services out of the state just like the "big corporations." To the extent taxes on small businesses are passed on to out-of-state consumers, Oregonians get help paying for the state budget's big ticket items.
Turning this year's record $300 million corporate kicker into a rainy day fund or repealing the corporate kicker entirely broadens Oregon's painfully narrow tax base.
The legislative Republicans' effort to cling to the kicker for some businesses but not others narrows the tax base - increasing the number of discount passengers on the Oregon ship of state at the expense of the remaining taxpayers.
The steady narrowing of Oregon's tax base over the last three decades is what got this state into its sorry fiscal shape. The road out of this dilemma is broadening the tax base again. The Legislature's Republican minority needs to learn this lesson.