State Chamber Research Foundation Suggests “Supply Side” Tax Reforms

The State Chamber Research Foundation (SCRF), which is a business think tank, suggests the Legislature consider a series of tax reforms to help encourage growth and investment in Oklahoma. The organization recommends the lawmakers consider creating a flat tax for individual income taxpayers and to eliminate certain business taxes.

“Runaway inflation, the possibility of a looming recession, and anti-growth policies from the federal government are creating a 1970s-style outlook for the American economy,” said SCRF Executive Director Ben Lepak. “Several decades ago, a period of prolonged ‘stagflation’ was defeated by supply-side economists and leaders like Ronald Reagan who understood a common-sense proposition: if you want more of something, tax it less. Like Reagan, our lawmakers should now turn their focus towards boosting private sector investment in the production of goods and services by reforming our tax code and reducing the tax burden on families and businesses.”

The plan for the flat tax for individuals is to collapse the current six income tax brackets into one and to raise the standard deduction. The initial flat tax would be set at 4.25% in the first year. If growth triggers of 1.5% are met, the tax would be reduced by .5% each year until it reached 2.75%.

For the business tax reforms, the SCRF suggests repealing the franchise tax, create an exemption for Tangible Personal Property tax, repeal the “throwback rule” which has led to tax avoidance by locating distribution outside the state, and to move to a single sales factor apportionment for companies which do business in multiple states.

“Besides lowering personal income taxes, lawmakers should also modernize business taxes and eliminate the most economically unproductive taxes on capital investment,” said Lepak. “If we act soon to implement pro-growth tax policies, Oklahoma can become a national model for prosperity and growth during turbulent economic times. Other states, and perhaps even the federal government, will want to emulate our success.”