Auditor Gary Jones has issued a report addressing the short-term impact on the current state budget resulting from an overestimate of corporate tax revenues.
“It’s as important to understand how the overestimate occurred as it is to respond with a short-term solution and long-range plan,” Jones said. “This report points out that any miscalculation is attributable to an inability to know the number of tax credits issued, the financial impact of those credits, and when those credits are going to be cashed in.”
The State Equalization Board certifies revenue to be appropriated by the legislature based on estimates ultimately provided by the Oklahoma Tax Commission. As noted in the report, the estimate was ultimately decreased more than $174 million over a six month period when taxing officials became aware of a number of corporations taking advantage of perfectly legal options available to them to decrease their tax liability.
Estimate made on June 24, 2013 $481 million
Estimate made on December 19, 2013 $375 million
Estimate made on February 18, 2014 $307 million
“The intent of this report was to provide, critical information in a timely fashion and is not an in-depth analysis of corporate tax liability,” Jones said. “Oklahomans get two pictures each month of the financial health of the state. One picture paints a rosy place in which collections are up and all is right in the world of revenue.
“The official report usually follows the rosy characterization and is more accurate with regard to actual collections compared to the estimate and the authorized spending power of public entities.”
The Special White Paper Report notes the historical accuracy of the Oklahoma Tax Commission and the numerous OSU economists with whom it contracts to devise the estimate. The current revenue shortfall is more indicative of an inability to both know the number of tax credits in existence and the timing in which they will be utilized.
The Special White Paper Report, Estimating Corporate Income Tax Revenues in Oklahoma, is online at www.sai.ok.gov.
Access the report directly at: http://www.sai.ok.gov/docs/press/Estimating%20Corporate%20Income%20Tax%20Revenues%20-%20Special%20White%20Paper%20Report.pdf
