I have always believed the elimination of the state income tax is not only doable, but also imperative.
When the state’s soon-to-be released financial statements are published, they will likely show that Oklahoma state government spends 17 billion dollars each year. This does not include the money spent by public authorities (eg. the Turnpike Authority) or pension funds, which expend billions more.
The state income tax generates about $2 billion, or just over ten percent of this amount. So if state government could downsize expenditures by just 10%, the entire tax could be eliminated.
One of the primary motivational factors for my work to reduce government spending has been to deliver on the platform that I campaigned. I campaigned on getting rid of this tax. I don’t want to be someone who runs for office on big promises and then fails to deliver. I am committed to working as hard as possible to reduce the obviously unnecessary and inefficient spending so that this and other taxes can be eliminated and reduced.
The effort to eliminate the tax was greatly enhanced by the recent of a report from President Regan’s economic advisor Arthur Laffer (known as the father of supply-side economics) and the Oklahoma Council of Public Affairs. The OCPA report thrust this issue into the forefront of the legislative discussions of tax reform, and several legislators will file legislation this year to implement the plan and eliminate the tax.
The plan details how to eliminate the state income tax over the next ten years without increasing other taxes. The tax would be immediately converted into a 3% flat tax with ¼% reductions each year until the tax is completely gone.
Perhaps the most exciting component of the report is its description of the economic transformation that would occur in Oklahoma as a result of this action.
The report details how the elimination would increase the incentive for individuals to work, produce and save in Oklahoma. This would allow for increased spending that would result in more sales tax revenue, providing $3.5 billion to local governments and offsetting part of the lost income to state government. Personal income would increase by $47.4 billion. Some of those who would otherwise qualify for and use state and federal benefits such as food stamps, Medicaid and TANF will not need to do so. This would relieve part of the tremendous pressure on the state’s social service.
With the resulting increase of job opportunities, the migration of Oklahoma college graduates to the high performing states (including states like Texas and Florida who have no income tax) should subside. This would allow future generations to stay here and remain with their families.
When this new growth revenue is combined with the cost avoidance and the legislature’s ongoing cost cutting efforts and modernization reforms, I am convinced the overall impact of eliminating the state income tax will be minimal and there would be no need to increase other taxes.
You can view the OCPA report at hd31.org/187.
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State Representative Jason Murphey
State Capitol Building – Room #437
2300 North Lincoln Blvd
Oklahoma City, OK 73105
1(405) 557-7350 (Office)
1(405) 315-5064 (Cell)
http://www.HouseDistrict31.com
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