Oklahoma bills would cut income tax rates – in January 2016

By Patrick B. McGuigan | Oklahoma Watchdog

OKLAHOMA CITY — Proposals to reduce Oklahomans’ income taxes are back on track in the state Legislature, but with a twist.

Ideas being kicked around in the legislative process include triggers requiring tax revenue growth. Both legislative chambers are mulling bills that would cut taxes, but delay effective dates for nearly two years.

That’s not good enough for leading grassroots groups that are pressing for a “clean tax cut” to be implemented sooner, rather than later.

A week ago, it seemed possible, even likely, that any tax cut able to clear all the hurdles this year actually would boost taxes on at least some taxpayers. But after critical scrutiny of a proposal that had cleared his own chamber, Senate PresidentBrian Bingman, R-Sapulpa, intervened.

At his weekly briefing with reporters, Bingman said a new Senate bill intends to put back into place what the state Supreme Court overturned in 2013.

The measure would reduce the unpopular levy from the present 5.25 percent top rate, to 5 percent, assuming that growth revenue as of late 2015 would offset the reduction.

Dave Bond, chief executive officer of OCPA Impact, a lobbying organization focused on free market issues, was critical of the bill.

“Oklahoma taxpayers were promised income tax relief on their 2015 tax returns, but at this point, there are no remaining proposals at the Capitol guaranteed to keep that promise. Total tax collections from Oklahoma taxpayers and employers reached an all-time high last year, and they’re on track to set a new record this year, so any concerns about state government not having enough money are unfounded,” Bond said..

“Meanwhile, Kansas, to our north, has recently reduced their penalty on work, their income tax, below Oklahoma’s. And, they are reducing it further. And, Texas to our south, still takes less money from its citizens than we do here.”

Two weeks ago, Bond had cheered a committee’s approval for House Bill 3291, a measure without triggers to start the process of lowering the top personal income tax rate to 4 percent by 2018.

Gov. Mary Fallin, in her State of the State address and fiscal year 2015 executive budget, called for a tax cut, but Bingman said the governor had not, in his most recent conversation with her, picked a preference among the proposals still moving in the legislative process.

Oklahoma Policy Institute, based in Tulsa, advocates increased state spending. Gene Perry, the group’s policy director, told Oklahoma Watchdog the state shouldn’t “schedule tax cuts years in advance when we don’t know what our budget needs may be.”

“We could face a natural disaster, a drop in federal support, spiking health care costs, or who knows what. Legislators can’t predict the future, so they shouldn’t be putting our tax system on auto-pilot,” he said.

House Minority Leader Scott Inman, D-Del City, has opposed a tax cut. Responding to Oklahoma Watchdog’s questions at a weekly briefing with journalists, Inman said his Democratic caucus was “puzzled” to see Republicans pushing tax cuts that won’t be implemented for two years.

Inman and other tax cut critics point to a projected $188 million decline in revenue subject to legislative appropriation, saying public education, public safety and human services spending should be increased.

Bond and state Finance Secretary Preston Doerflinger, Fallin’s principal spending adviser, counter that total state government tax revenues are higher than ever. Doerflinger pressed his point in a recent discussion with Oklahoma Watchdog, saying the state will spend as much in 2015 as it did in 2013, so “the sky is not falling.”

The seemingly contradictory cut in direct appropriations is due to pre-determined expenditures for pensions and other state programs.

Contact Patrick McGuigan at pmcguigan@watchdog.org .

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