The Rich Reward

Image of sign from Occupy OKC

An analysis of Gov. Mary Fallin’s proposed income tax cut proposal shows that Oklahoma’s wealthiest households will benefit the most while 41 percent of its residents will get no benefit at all.

The overall average tax cut would be a paltry $29 while those in the top 1 percent in income would receive an average of $2,009.

The analysis, prepared by the Institute for Taxation and Economic Policy (ITEP) and distributed by the Oklahoma Policy Institute, clearly shows Fallin’s proposal is primarily designed to reduce the tax burden for the wealthy at the expense of the poor and middle class.

In her State of the State speech earlier this month, Fallin proposed cutting the top income tax rate from 5.25 to 5 percent despite the fact that Oklahoma faces a $170 million budget shortfall and has cut per pupil spending on a percentage basis more than any other state in the nation since 2008.

The regressive tax cut would mean a $135 million annual loss in revenue, according to OK Policy, while 41 percent of Oklahomans wouldn’t get a break at all because they aren’t taxed at the top income rate.

The arguments justifying the proposed cut are based on fallacious claims that it would drive economic development or that Oklahoma needs to be competitive with neighboring states with lower tax rates. There is no actual empirical evidence or specific studies related to Oklahoma that show this is actually true. Thus, it’s not difficult to view the proposed cut in pure class terms. The rich will benefit greatly; the poor will not benefit at all. The middle class gets a token cut.

The Oklahoman editorial board tried to justify the proposed tax cut in a larger perspective, but its right-wing blinders failed to produce a valid argument. This is from a recent editorial supporting the cut:

It’s also true that the more money you earn, the more money you save when the tax rate is cut. That’s just basic math. This doesn’t mean the rich are getting a bigger tax cut than the middle class. The rate reduction would be the same for both. Instead, it means the rich have more money than the middle class and pay more in taxes, which isn’t breaking news. They will pay more in taxes regardless of the rate.

This is a tired argument. Yes, the rich pay more in taxes because they are rich. Everyone gets that. Why repeat the obvious? It’s like saying, “The rich are rich. They have all the money.” To use italics just like The Oklahoman editorial, We know that. The point is the flat rate reduction doesn’t benefit thousands upon thousands of Oklahomans at all and only gives a small cut to many other Oklahomans. Why not RAISE the tax rate on the top 1 percent and lower the rate for others? Obviously, Fallin and The Oklahoman would scoff at this progressive idea, but at least it gives us something to debate rather than just listening to wishful thinking about economic development and reading another ad nauseam lecture about the intrinsic wonderfulness of rich people.

Along with her proposed tax cut, Fallin wants steep budget cuts to higher education and the Oklahoma Health Care Authority. This will ensure the state will continue to have a low college graduation rate and that the poor will continue to have limited medical care options.

Dumb? Unhealthy? For decades, these have been the sweeping and one might argue unfair stereotypes of Oklahomans from some people who live in other sections of the country and world. Fallin’s proposed tax cut wouldn’t change that at all.