Tax reduction in Oklahoma this year

This is the time of year when Governors across the nation are providing State of the State speeches to their various state legislatures. I enjoy watching these presentations (they can be viewed at c-span.org). It is important for Oklahoma policy makers to know what policy makers in other states are working on to ensure we learn from their efforts.

In designing a governance system that emphasized states’ rights, our nation’s founding fathers wisely created an environment which allows states to serve as laboratories for testing policy. Over time, those states endorsing and applying good policy will grow as people and business will migrate to the state to take advantage of the good policies.

This is why the concept of states’ rights is so important. When states are given control of their own destinies they create a free market of ideas and concepts that is rewarded by the actions of those who move to the states with sound policies while abandoning those who implement bad policy.

In the State of the State address, the Governor updates the legislators and the public on the activities of the past year and talks about his plan for the next year.

My foremost motivation for viewing these addresses is to harvest new ideas for our House of Representatives’ Government Modernization effort.

I have also become fascinated by the very different fiscal directions red states are taking from blue states. No presentation better summarizes this difference than last week’s State of the State address by Kansas Governor Sam Brownback.

Governor Brownback aggressively advanced rapid decreases in the Kansas income tax during the last legislative session and he isn’t stopping there. The tax used to be significantly higher than the Oklahoma tax. Now it is lower. Brownback is again calling for a significant decrease with the goal of completely eliminating it.

Here is what is so alarming for Oklahoma policy makers. Kansas isn’t the only state in this region that is taking this path. Nebraska Governor Dave Heineman’s State of the State features his call for eliminating the Nebraska income tax. In March, during his State of the State, Louisiana Governor Bobby Jindal is expected to call for the elimination of that state’s income tax.

These efforts contrast with the policies in the blue states such as California where taxes continue to rise. Perhaps the most antithetical of the Brownback State of the State was Massachusetts Governor Deval Patrick’s State of the State in which he called for and attempted to justify the need of nearly 2 billion in tax increases by articulating many of the problems in his state. It’s fascinating to observe the irony as those in big government states attempt to justify the need for even bigger government by pointing to the failures of big government.

The governors of the conservative states know that the federal and blue state tax increases provide a great opportunity to their states. Entrepreneurs who want to offset the losses to the federal tax increases can do so by moving their businesses to the low-tax states.

Oklahoma must, and I believe will, join the efforts to reduce state income taxes to the point of elimination.

As part of the upcoming legislative session, I believe it will be important for tax reduction to advance through the legislative process early in the session. Last year, legislative leaders simply waited too long into the session and didn’t have time to properly construct the proposal.

While the federal tax increase provides Oklahomans with a great opportunity to receive new business, the efforts by surrounding states could place us at a great disadvantage should we not match their efforts to lower the cost of government.

In her upcoming State of the State, Governor Fallin will ask the Legislature to reduce Oklahoma’s income tax rates. I look forward to supporting her proposal.

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.