In case you didn’t know it, there is a battle going on in Oklahoma. It is a battle over tax reform and amazingly, it is between Republicans and Republicans, not Republicans and Democrats. Make no mistake, the Democrats don’t like the idea of simplifying the tax code in Oklahoma, but they aren’t in a position to stand in the way of Governor Mary Fallin’s plans. The Republicans in the State Senate are and that is exactly what they are doing. I have to wonder why they are acting like Democrats and insisting the tax cuts be “paid for” before they are implemented.
The best way to get a sense of what Governor Fallin plans to do with tax reform is to compare the current tax code with what it will look like under her plan.
As you can see, there is a world of difference between the current tax code and the tax code Governor Fallin wants Oklahoma to use. I’ll ask the obvious question; what’s there not to like in this plan. Governor Fallin meant what she said when she said she wanted to simplify the tax code in Oklahoma. Her plan would do this. At the same time, it would completely remove the income tax burden, as small as it may seem, from the families in Oklahoma who are making less than $30,000 per year. It is important to note that the Governor also plans to further reduce the income tax over a period of years, based on the tax revenue growth that is expected to come from lowering the income tax. This comes straight from her plan.
After 2013, the governor proposes further reductions by cutting the remaining income tax an additional quarter point in every year where the state of Oklahoma hits a revenue growth trigger of 5%; eventually eliminating the income tax for every Oklahoman. Governor Fallin’s income tax plan is a bold, responsible and pro-‐economic growth measure that will lead to greater prosperity for all Oklahomans for decades to come.
The plan being pushed by Governor Fallin has already passed the Oklahoma State House, but the State Senate has decided to produce their own plan. As it stands now, it seems there is very little chance of real tax reform in Oklahoma. At least, not during the current legislative session. We can speculate all we want about why the debate on this issue is unfolding this way, but speculation really isn’t necessary. Governor Mary Fallin ran on a platform of tax reform in our state and she is trying to live up to that promise. Standing in her way are the few Democrats we still have left in the State Legislature, and the Republicans in the State Senate, who seem to be bowing to the lobbyists for special interest groups.
To illustrate that point, let’s take a look at an editorial from The Wall Street Journal, originally published on May 15, 2012.
A cavalcade of lobbyists, including local Chambers of Commerce, teachers unions and welfare groups are fighting the tax cut. The Tulsa and Oklahoma City Chambers are pleading for corporate welfare that benefits politically connected large corporations, rather than rate cuts for all businesses.
Last week economists on the public payroll from the University of Oklahoma and Oklahoma State came out against the tax cut. Cynthia Rogers of OU said that the evidence on whether income-tax cuts help the economy is “inconclusive.” Maybe in the faculty lounge. But Okahomans can see the jobs bonanza across the border in Texas, which pays its bills with a sales tax.
The professors also fret that Oklahoma won’t be able to balance its budget with an income-tax phaseout, but that’s what opponents also said when former Governors Republican Frank Keating and then Democrat Brad Henry cut the rate to 5.25% from 7%. Tax revenues kept rising.
I have a question for the Republicans in the State Senate. Exactly what do they not understand about how cutting taxes increases tax revenue? They are letting themselves be distracted from the task at hand by listening to the special interest groups. To hear the lobbyists for these groups talk, you would think further reducing the Oklahoma income tax will result in catastrophic financial failure of our state. Nothing could be further from truth. The Wall Street Editorial goes on to detail how state revenues are up 8%, since the beginning of the year. Could it be they want to spend the extra tax revenues, instead of giving back to the citizens of Oklahoma?
Governor Mary Fallin has all but conceded that her version of significant tax reform will not happen this year. Her office is presently in negotiations with the Senate Republicans, trying to cut the rates as much as possible. If you want to stand with her, I suggest you call the State Capitol. The link will take you to a directory of Senators. You can contact them via email or phone. Tell your representative where you stand on this issue and what you expect them to do. Making them feel the heat is one way we can stand up to the special interest groups and accomplish tax reform in Oklahoma.