Key Points
Oklahoma’s capital gain deduction allows income from the sale of Oklahoma real estate or stock in an Oklahoma-based firm to go fully untaxed.
- The capital gains tax break is costing Oklahoma hundreds of millions without paying off in economic growth. Economic development experts working with Oklahoma’s Incentive Evaluation Commission concluded that this tax break reduced state revenues by $474 million from 2010 to 2014 while creating only $9 million in revenue growth, for a net cost of $465 million.
- The capital gains tax break is poorly targeted and poorly monitored. Unlike similar capital gains deductions in other states that have them, Oklahoma’s deduction is not targeted to any specific industry and has no requirement that gains from this tax break be re-invested in Oklahoma.
The capital gains tax break benefits a small number of households at the expense of most Oklahomans. The capital gains deduction costs more than $100 million going to less than 20,000 households, or barely 1 percent of all households filing tax returns in Oklahoma. In 2014, nearly two-thirds (64 percent) of the benefit went just 824 households with incomes of more than $1 million.- Ending the capital gains tax break is supported by Oklahoma voters. Fifty-five percent of Oklahoma registered voters favor ending the capital gains tax break, compared to just 35 who would oppose ending it, according to a recent poll by Global Strategy Group for OK Policy that looked at various revenue ideas for the state budget.
The Bottom Line
Oklahoma’s capital gains tax break is shown to be a wasteful loophole and inefficient use of tax dollars. Lawmakers should repeal this tax break to ensure a broad-based tax system that works for all Oklahomans without unduly burdening or supporting any small group of people.
Please ask your legislators to support SB 1086 to sunset the capital gains deduction in 2018.
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The post Support SB 1086 to Repeal the capital gains tax deduction appeared first on Oklahoma Policy Institute.
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