We’re getting closer to launching the OK Policy Online Guide to Oklahoma Budget and Taxes, a comprehensive resource for understanding state and local government finance in Oklahoma. Most of the guide is factual in nature–how we collect tax dollars, how we spend them, how we make budget decisions, and where you can get more information.

We are an advocacy organization, however, so the Guide points out two major areas where we believe Oklahoma can and must do better. One is the ongoing fiscal gap between our ability to pay for services and our demand for those services. We’ll address that next week. For today, we’ll preview some of the Guide’s discussion of tax fairness.

This graph shows the percentage of income paid in taxes by each of  seven income groups. The regressivity of the system is obvious since the percentage paid in  taxes drops with each increase in income. Those who are in the lowest 20 percent of income earners–making $12,000 or less each year–pay 12 percent (one-eighth) of their income in taxes. The percentage of income paid in taxes falls slightly for each income group above the middle. Those in the top 1 percent–making $250,000 or more each year–pay 8 percent (one-twelfth) of their income.

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In the first year that Republicans fully control the Legislature, who would expect we’d have so little to report from the tax cut beat? The economy and a $600-plus million revenue shortfall, of course, were major factors in tax decisions. Legislators did not want to cut taxes and have to make the corresponding budget cuts in the same session.

We’re pleased our elected officials understood that state services are in a precarious position, even with our current revenue structure. We’re  even happier that they largely avoided the “easy” alternatives of making reductions that took place in later years or only affected local governments. Proposals to cut the income tax from 5.5 percent to 5.25 percent next year–regardless of the revenue picture–and to put more limits on the growth of property taxes, were both left on the shelf. So were elimination of the sales tax on groceries, reducing the 50-cent monthly 911 tax, and any number of sales and income tax exemptions.

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