As I think back over the recently concluded legislative session, I recall an especially notable moment during one of the frequent tax increase sessions of the Appropriations and Budget Committee.
Those who run the committee were bringing forward one of their many tax increase proposals. It included a proposal particularly far reaching in scope as it enacted many millions in new taxes.
Committee members were told this bill would tax various video providers, including Netflix and Hulu.
“What is Hulu?”
It was a question that prompted laughter from the audience. It had been proffered by one of the more senior members of the committee who was a supporter of many of the new taxes.
The humor of the situation notwithstanding, I couldn’t help but take note of the extraordinariness of the moment. Within just a couple of minutes, this committee member would likely cast his vote for taxing a product that until this time he didn’t even know existed.
Had they gotten their way, the tax increase proponents would have likely enacted this tax within just a couple of days of this committee vote.
How wrong is it that a new tax can be introduced and approved by those who don’t even have time to understand what they are taxing? Does anyone really believe that good taxation policy comes forward when those who enact these policies have little to no understanding of the industries they tax? Doesn’t this demonstrate the extreme capriciousness of the Oklahoma policy making process?
Fortunately, the Netflix-Hulu tax was just one of the many tax proposals approved by the Appropriations Committee but subsequently NOT approved by the entire Legislature.
This includes other taxes on the digital economy such as PayPal, ebooks and iTunes; new taxes on video, including cable and satellite television; and even a massive new tax on those who transfer a car to a family member, a draconian and unfair proposal that even appeared to tax a vehicle that transferred from a deceased family member to his/her survivors.
These tax proposals failed to make it through the entirety of the legislative process, notwithstanding the support of the appropriations committee.
In addition, the committee voted to eliminate the deductibility of many itemized deductions that exceeded a certain threshold. This affected the taxpayer’s ability to include home mortgage payments as a deductible expense. For a period of time, this particular proposal would have impacted the deductibility of charitable contributions — a particularly offensive indication that state government was willing to take on faith-based charities in its desperate effort to take more money from Oklahoma taxpayers.
This particular bill was especially ironic, given the insistence of House legislators to approve a $1,000 teacher pay raise.
Let’s consider what would have happened had they gotten their way and been successful in enacting both the pay increase and the elimination of deductions:
Teachers would have received a pay increase of $83 per month, a benefit upon which they would have had to pay taxes; however, many would have been significantly impacted by no longer being able to deduct part of their home mortgage, a new liability that may well have exceeded the net benefit provided by the raise.
Is it any wonder that the public has so little faith in politicians