GOP Legislators Propose Tax Cut Plan, OCPA Impact Endorses

Senate Communications Division

A group of Republican lawmakers from the Oklahoma Senate and House have introduced a tax cut plan for consideration in the 2014 legislative session that will lower Oklahoma’s individual income tax rate to four percent within four years.

Last year, the Legislature approved a tax rate reduction that would have lowered the individual income tax rate to five percent, but that legislation was struck down late in 2013 by the Oklahoma Supreme Court. As a result of the court’s decision, the Republican government that took office in Oklahoma following the 2010 elections still has not enacted a reduction of Oklahoma’s individual income tax rate, which currently sits at 5.25 percent.

Senate Bill 1849 and House Bill 3291, filed this week, would each lower the state’s individual income tax rate to 4.75 percent on January 1, 2015, then to 4.50 percent on January 1, 2016, 4.25 percent on January 1, 2017, and finally, four percent on January 1, 2018.

“Economic growth and principles of a limited government continue to be held back by our relatively high income tax rate,” said Senator David Holt, R-Oklahoma City, lead Senate author of SB 1849.

“And the problem is even more acute now that we find ourselves in an income-tax sandwich between Texas, which has no income tax, and Kansas, which has lowered its rate below ours. I have introduced a tax cut bill every year I’ve been in office, and I supported the 2013 tax cut that was later thrown out. But I believe we need to be doing something bolder than was proposed in 2013. We should view the Supreme Court’s decision as an opportunity to be bolder this time.”

“When we talk about reducing Oklahoma’s income tax rate, we’re talking about growing the overall economic pie in Oklahoma,” said Rep. Tom Newell, a fellow author of HB 3291. “In order to increase job growth and the level of individual opportunity in our state, we must reduce the penalty we charge on work and productivity. In doing so, we will make it more attractive for employers, both big and small, to invest here.”

Senator Nathan Dahm, R-Broken Arrow, joins Holt as a co-author of SB 1849. Reps. David Brumbaugh, R-Broken Arrow, Josh Cockroft, R-Tecumseh, Jon Echols, R-Oklahoma City, Elise Hall, R-Oklahoma City, Mike Turner, R-Edmond, and Harold Wright, R-Weatherford, join Osborn and Newell as co-authors of HB 3291.

SB 1849 and HB 3291 will each be considered in the 2014 legislative session, which begins February 3.

Dave Bond, CEO of OCPA Impact, Inc., said, “Time and again, Oklahoma has lost employers, jobs and opportunity to states that do not penalize work and productivity like we do here in our state. In the last two decades, Oklahoma lost nearly $1 billion in working capital and over 30,000 productive, taxpaying citizens, largely to states with no income tax.

“In Oklahoma, total state tax collections, from all sources, were at an all-time high in the last full fiscal year. This, after the largest income tax rate reductions in state history, signed into law in 2005, had run their course by the end of 2012.

“Governor Mary Fallin, in her State of the State address just two years ago, proposed reducing Oklahoma’s penalty on work, the personal income tax, to 3.5%, and then phasing out the tax from there. The dual proposals unveiled in the Senate and House this week represent a significant step toward Governor Fallin’s worthy goal.

“In the regional, national and global competitions for jobs and opportunity, other states are following Oklahoma’s example from the past eight years. We have to be careful not to take our foot off the gas. Workers’ comp and tort reforms enacted in the past year will prove significant, but we should not allow ourselves to be stuck in the middle of an income-tax sandwich between our neighbors to the north and south.”