Taxing Issues

Image of Jay Paul Gumm

Eliminating the 4.5 percent state sales tax on groceries has emerged as an issue in the upcoming 2009 legislative session, generating public discussion and raising questions about Oklahoma’s overall taxation system.

The questions are longstanding: Can the state afford to eliminate taxes on groceries without replacing the lost revenues? Should the state also eliminate its income tax and raise property taxes? Have recent income tax cuts and tax breaks for big companies in Oklahoma primarily benefited the wealthy? Have the tax cuts in recent years helped the economy?

Will these questions get serious and sustained debate among state leaders?

State Sen. Jay Paul Gumm, a Durant Democrat, pictured right, is one state leader leading the charge to eliminate the sales tax on groceries, which he has argued “is morally wrong.” He writes, “The grocery tax is unfair to middle- and lower-income Oklahomans because paying the tax costs them a greater percentage of their income.” State Sen. Randy Brogdon, an Owasso Republican, and state Rep. Eric Proctor, a Tulsa Democrat, have also introduced a bill to eliminate the grocery sales tax.

The tax proposals, according to a recent media report, could cost anywhere from more than $300 million to $700 million. The legislature faces a current shortfall of $600 million so the tax cut could undoubtedly strain the budget even further in the coming years.

Despite the loss in revenues, Gumm is right. Taxing groceries is simply wrong because food is a necessary component of basic survival. Taxing groceries can literally take food from a baby’s mouth. That’s why a majority of states either don’t tax groceries or tax them less than other products. Oklahoma should definitely eliminate the tax.

But what about the larger issue of creating a more equitable and progressive tax system in Oklahoma? The Oklahoma Policy Institute, a think tank that advocates for the poor, says the state’s recent tax cuts from 2004 to 2006 benefited the wealthiest Oklahomans the most. (OK Policy has recently advocated raising the grocery tax credit.)

With the state economy sinking and the national economy facing a major crisis, it might not seem now is such a good time to tinker with the tax system. But with a new White House administration promising change and a better deal for working families, the time could be ripe for a systemic overhaul that benefits the middle class, not the rich.

Oklahoma’s wealthiest citizens have benefited greatly because of tax cuts given to them in recent years by the Bush administration and the Oklahoma legislature. These neoconservative-driven tax cuts were part of an ideology that has been soundly repudiated by voters on the national level as the country faces what some financial experts call the worst financial crisis since the Great Depression.

So eliminate the state sales tax on groceries and change the income tax rates as well just as long as the new system is real progressive taxation in which wealthy people contribute their fair share.

Vote on a poll about the issue.

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State Faces Budget Shortfall

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The Oklahoma Policy Institute has issued a policy brief that outlines some ways the state might handle its $600 million budget shortfall this upcoming legislative session.

The brief argues the state has three ways to approach the shortfall: (1) Tap into its Rainy Day Fund, the state's savings account, which has approximately $600 million in it, (2) increase revenues from new or increased taxes or fees, which is always a “formidable” political task in Oklahoma, and (3) cut agencies’ budgets, which “is economically harmful in a downturn, even compared to raising taxes.”

The brief also argues the state might benefit from a federal fiscal stimulation bill if it includes money to help states.

David Blatt, director of public policy for OK Policy, writes:

Although Oklahoma managed to stave off the national economic downturn longer than most states, the impact of plummeting energy prices and a slowing economy is now clearly being felt on the state budget. Oklahoma has now joined the vast majority of states that are projecting shortfalls for the upcoming budget year. Most analysts are predicting that the current recession will be relatively long and deep, ensuring that the state fiscal crisis will continue beyond the upcoming budget year.

OK Policy is a think-tank organization based in Tulsa that advocates for the poor and working families. Read the brief here. Read a one-page summary of the brief here.

In recent years, Oklahoma leaders handed out huge tax breaks to the state’s richest citizens setting up the immediate shortfall, though some expect this new economic downturn could last for years. The state essentially squandered its moment when it was flushed with cash to improve its educational and health systems and infrastructure. Instead, it rewarded its richest citizens, who were also enjoying huge tax cuts from the federal government.

The “trickle-down” theory of economics was finally repudiated under the President George Bush administration, which left the country with its worst economic crisis since the Great Depression. Let me repeat this: Tax cuts given to rich people don’t stimulate the economy; they simply make rich people richer. The economy always does better when government invests in its people and infrastructure.

As the economy worsens here, it’s important to realize the state’s current power structure—and this includes its corporate oligarchy, which made off with the cash in tax breaks in recent years—will never adequately fund education, its health systems and social services programs. It doesn’t matter if the state is facing shortfalls or surpluses. The needy will go without, and our education systems will remain underfunded. The fight goes on.

Oklahoma native Will Rogers famously put it this way, “Be it pestilence, war or famine, the rich get richer and the poor get poorer.”

Then again, maybe there’s room for some hope. The billionaire George Kaiser, a Tulsa oilman and longtime state philanthropist, recently argued before the House Appropriations and Budget Committee the state should end subsidies for oil and gas companies and give the money to health care and educational systems.

Perhaps ending the subsidies would help meet the shortfall, save some jobs, and give our education systems at least a standstill budget.

Will Kaiser’s suggestion get some traction or at least some discussion? Let’s hope so.

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Okie Funk Nominated For State Blog Awards

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Blog Receives Two Nominations

Okie Funk has been nominated for Best Overall Blog and Best Political Blog in the fourth annual Okie Blog Awards contest.

State bloggers nominate and vote on their favorite blogs in the contest, which is operated by Mike Hermes. Hermes publishes the popular Okiedoke blog. You can find a list and links to all the nominated blogs and directions on how to vote here. The voting is open for Oklahoma bloggers through Feb.7.

Okie Funk has won the Best Political Blog award the past two years. Blue Oklahoma, a community blog I help operate, has also been nominated for Best Overall Political Blog.

The list of nominees shows once again the vibrancy and diversity of the Oklahoma blogging community. I urge everyone, whether you’re voting or not, to take the time to click through the list.

The World Against Bates

Speaking of blogs and bloggers, Michael Bates, the author of the popular Batesline blog, was recently sued for libel over a commentary he wrote about the Tulsa World that was published in Urban Tulsa Weekly.

The World initially sued Urban Tulsa Weekly as well, but later dropped it from the suit when the publication printed a retraction. Here is a recent story about the suit published in The World. Here is its initial story, which includes a pdf of the lawsuit. The pdf includes Bates’ article. Here is information from Batesline about the suit. The lawsuit claims the commentary contained inaccurate information about the newspaper’s circulation.

Bates and I are at different places on the political spectrum, but I believe continuing the lawsuit against him at this point is frivolous. It might even backfire on The World.

Urban Tulsa Weekly has printed a correction. What else does The World want? Do the publisher, editors and reporters at The World no longer believe retracting and correcting published information is an acceptable method for a publication and its writers to set the record straight concerning the work of one of its reporters/contributors? In other words, do they believe The World itself should allow its own reporters/contributors to face damages in a libel lawsuit against them even though it corrects the story in question? Doesn’t this lawsuit actually encourage people to sue newspapers and their writers for libel? Doesn’t it give potential plaintiffs a very specific legal opening to sue writers at The World even if the newspaper corrects a story someone claims is libelous?

It’s highly unusual for a newspaper to sue for libel since publications are most often on the other side of such lawsuits. Why encourage people through example? Yet these are new times for newspapers, which are in a financial decline and compete with a myriad of new media outlets. Both The World and The Oklahoman have recently cut their workforce.

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