Reducing the State Income Tax

Bookmark and Share

GNP App

Over the next few days, the Legislature will consider a proposal to reduce Oklahoma’s income tax. This year, Oklahoma state government will have more than $200 million of new growth revenue to spend. I believe it is vital for this revenue to go back to the taxpayers who over financed state government. This is important, because if the money is not returned, it will almost certainly be used to grow the size of government.

As Chairman of the House Government Modernization Committee for the past four years, I have observed first hand how much waste takes place in state government. Each time we receive an independent consultant’s report of state government processes, wasteful practices come to light. These inefficiencies cost taxpayers millions of dollars.

We have been somewhat successful in acting on these reports and tackling the waste, in part because the economic downturn forced state government to slow the increase in spending. This gave us the political muscle necessary to overcome the opposition of special interests and the bureaucracy, and win approval for the reforms we are now discussing. With the increased amount of money coming into state government, we run the risk that the new money will fund new inefficient practices.

By returning the money to Oklahoma taxpayers, we keep the pressure on policy makers to continue to find, expose and eliminate wasteful practices. There are still many wasteful practices inside state government which we must address through legislation in the upcoming years. The new money, if used to fund this waste, will make it easier for politicians to cave to the intense pressure to oppose future reforms.

This makes implementing Governor Fallin’s proposal to reduce taxes especially important.

I wrote an article a few months ago addressing some of the foremost concerns put forward by opponents of reducing the state income tax. You can still read that article by visiting hd31.org/227.

Opponents point to the fact that Texas does not have an income tax, but does have high property tax rates. They fear that Oklahoma may also increase its property taxes if the state income tax were to go away. In my article I pointed to the fact that there is no legal mechanism for the state to create a statewide property tax. Property taxes are collected at the local level of government and are not used to fund state government. Instead of increasing property tax, reducing the state income tax actually provides local governments with a tool to keep property taxes from going up. This is because studies show that reducing the state income tax results in more economic activity. The new activity increases local government sales tax revenues, thus allowing local governments to avoid having to increase sales and property tax rates. While it may seem counterintuitive on the surface, the effort to reduce state income taxation actually aids the property tax reform effort.

I look forward to supporting the effort to reduce the tax burden on Oklahomans.

Thank you for reading this article. Your interest and input are much appreciated. Please do not hesitate to email Jason.Murphey@hd31.org with your thoughts and suggestions.

Leave a Reply

Your email address will not be published.

This site uses Akismet to reduce spam. Learn how your comment data is processed.