Editorial: Oklahoma GOP's 'path to zero' personal income tax could put state into dire straits
Oklahoma lawmakers have finally reached a good place in revenue with the help of federal pandemic funds and robust oil prices. That won't last. It never does.
Even the recent monthly revenue reports show lower income than in the previous year, indicating a post-pandemic leveling off. Some of that may be attributed to lower oil prices and tax cuts enacted two years ago.
Yet House Speaker Charles McCall said recently that House members are setting Oklahoma on a "path to zero" personal income taxes. Gov. Kevin Stitt remained firm on demands to lower the income tax, saying he will veto any budget without one.
Both cite a robust economy and billions of dollars in state savings accounts, arguing that Oklahoma workers deserve a break.
Oklahomans also deserve much better state services than what we've been getting.
It does no good to have zero income tax if state buildings are crumbling, parks are deteriorating, public schools can't find teachers, CareerTech has thousands on job-training waiting lists and employers struggle to find a skilled workforce. It's still difficult to obtain a driver's license or file for unemployment.
Lawmakers reached bipartisan agreement earlier to eliminate the state's 4.5% sales tax on groceries, which is expected to take about $370 million out of state revenue.
A grocery sales tax is a regressive tax with a greater affect on low- to moderate-income Oklahomans. It's a tax burden that residents deserved to have lifted.
The state's graduated income tax tops out at 4.75%. Stitt has called on a 0.25 percentage point across the board tax cut, which would eliminate between $235 million and $293 million annually. The median household savings would be about $92 a year. The lowest wage earners would save about $19, and the top 1% of wealthy Oklahomans would get about $2,634.
Oklahoma lawmakers cannot raise taxes easily. State Question 640, which was pushed in 1992 by Republican leaders, mandates that any revenue-raising bill reach three-fourths approval in both legislative chambers and receive the governor's support. Lowering taxes takes only a simple majority vote.
Since then, lawmakers have met that tax-increase mandate only once. In the past 20 years, the personal income tax has been reduced nine times. Since 2002, it has come down from 7%.
Cutting taxes always plays well as a political issue. However, Oklahoma learned the hard way that cutting too far can lead to economic crisis. By 2008, revenue was plummeting, setting off years of revenue failures and mandated state service budget cuts.
Prisons became overcrowded, colleges and parks deferred maintenance on facilities, disability services wait lists soared and teachers held a walkout at the Capitol. The walkout led to House Bill 1010xx, which provided money for education by raising taxes on cigarettes, gasoline and gross production.
Any loss of state income requires a balance — either replace it with another source or cut services. No lawmaker has explained how this "path to zero" will avoid history's mistakes.
We're encouraged by the conservative approach taken by Senate Republican leaders. Senate President Pro Tem Greg Treat noted that an income tax cut now would put too much strain on state finances.
Rather than take that risk, we urge lawmakers to focus less on eliminating income and, instead, put energy into using taxes better to fix existing problems.
[Editorial / Tulsa World]
