Okie Tax Cut Squabbles . . . Again

Image from Old American Century

The only tax-cut proposal left standing this legislative session is one that grants no financial relief for 43 percent of Oklahomans and is heavily weighted to benefit rich people here.

Let’s be clear: Gov. Mary Fallin’s proposal to drop the state’s top income tax rate from 5.25 to 5 percent ignores difficult arguments over what changes are desperately needed in the state’s tax code and is simply a give-away to the wealthy here. Are the rich here even demanding a cut or is Fallin simply pandering? Why eliminate $120 million annually from state revenues? The average tax cut under the proposal is only $39 a year, but the top one percent of income earners get an average tax cut of $1,870.

This is so obviously apparent, the measure containing her bill, House Bill 2032, got stalled in the Senate Finance Committee yesterday, although conceivably it might well be passed by the time this is published. The political stall has to be construed, as well, as a direct retaliation after a House subcommittee killed a Senate bill that proposed lowering the top rate from 5.25 to 4.75 percent but also tackled the politically volatile issue of deductions and tax credits.

In essence, for all its own flaws, the dead Senate tax bill, SB 585, showed its creators had taken time and used a fair amount of energy to assess the state’s current tax code while thinking through the implications of revenue loss. Fallin’s proposal is merely a tax cut for a tax cut’s sake. Arguments that such a cut will lead to corporate relocations here or that it’s just a first step toward eliminating the income tax altogether are more than disingenuous. There’s little empirical evidence showing interstate tax policy affects economic development and the piecemeal erosion of state revenues is hardly sustainable in a state that is known as a place that now defunds education for no reason and has the lowest per-pupil spending rate in the region. I wrote about that issue here.

Senate Finance Committee Chairman Mike Mazzei, a Tulsa Republican, has indicated he wants to collaborate with House members about reforming the tax code before moving forward, but it appears the tension between the House and Senate and Fallin’s office is ongoing. Fallin’s bill is sponsored by House Speaker T.W. Shannon, a Lawton Republican and Senate President Pro Tempore Brian Bingman, a Sapulpa Republican.

Let’s hope we’re witnessing the start of a Republican squabble that will lead to the downfall of Fallin’s bill and any tax cut for this session. This would be a repeat of last year when Republican legislators couldn’t come to an agreement. By all means, have a serious conversation about the tax code and clean it up fairly, but passing a tax cut just to say you’ve passed a tax cut is not right.