Health Care Lawsuit and Business Activity Taxes

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June 13, 2011

Over the past few days I have received questions regarding a couple of issues. I know that if several people have asked questions about these matters, it’s possible that a number of other constituents are wondering the same thing.

As constituents watch news sources about the Florida legal action against the federal health care proposal they may notice that Oklahoma is not listed as one of the 26 states that filed the action. They want to know why Oklahoma has not taken action.

It is true that Oklahoma has not joined the Florida lawsuit against the proposal. However, Oklahoma has filed its own separate action. There is an important reason why Oklahoma’s suit should be kept separate from the Florida’s suit.

Last year, the Legislature approved an initiative to allow the voters to place a provision in the Oklahoma Constitution. This initiative was approved by voters in last November’s election. It placed a clause in the Constitution to keep Oklahomans from being forced to purchase health insurance. Oklahoma is one of just three states to have adopted a similar Constitutional provision.

This provision gives Oklahoma additional standing in seeking to stop the federal mandate. As such, Oklahoma has a stronger case by filing suit on its own merit instead of joining the Florida lawsuit. Oklahoma Attorney General Scott Pruitt filed the action January 21, 2011 in the federal district court for eastern Oklahoma. You can view the filing by visiting hd31.org/125.

I have also received questions about Oklahoma’s Business Activity Tax (BAT). The BAT is a $25 assessment on Oklahoma businesses. It is offset by either a $25 tax credit or a $25 credit against the certification or registration fees paid to the Secretary of State. This is a nuisance for business owners and the Tax Commission who must fill out the paperwork and administer the tax. You are likely understandably curious about why the an offsetting tax like this is on the books.

The BAT is a response to a 2009 Supreme Court ruling that stated Oklahoma must tax businesses for business activity items such as intangible property. They stated that items exempted from taxation, even intangible ones, must be specifically exempted in the Constitution. You can only image how complicated this would become when business owners had to report and be taxed on intangible items such as trademarks, software, patents, licenses, contracts, customer lists, and even goodwill. This could have been a huge tax increase for business owners.

The BAT appears to meet the mandate of the court without requiring the massive new amounts of taxation and will sunset at the end of 2012. This will give the Legislature the ability to send a question to the voters in the 2012 election to amend the Constitution and make it clear that intangible business activity items are not taxed.

If you have questions about these or other issues, please do not hesitate to contact me. I enjoy the opportunity to provide insight as to why things happen as they do. Your questions let me know what I need to address in these articles.

Jason Murphey is an Oklahoma State Representative for District 31.

One Response to "Health Care Lawsuit and Business Activity Taxes"

  1. Karen Fields   November 29, 2011 at 8:08 am

    The OK BAT came as a surprise when I filed our taxes. I was furious. It now ranks as my most despised tax, above the ridiculous tax on groceries.

    I’m a native Texan and abhor state income taxes. We didn’t owe OK state taxes, but I had to go through everything, just to pay this.

    Way to go, OK. It helps me talk hubby into moving to Texas, or Florida, so I don’t have file more paperwork, every year.

    This tax will never “sunset”.

    Reply

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