Skip to Content

Focus on “government spending” instead of real people is leading lawmakers astray

by | May 17th, 2017 | Posted in Budget, Taxes | Comments (0)

Right now most Oklahomans are worried about how our lawmakers will fill a huge budget shortfall following years of cuts that have contributed to teachers fleeing Oklahoma classrooms, left Oklahomans with severe disabilities and children in the child welfare system at risk of losing basic protections, and created an extremely dangerous environment in prisons for both inmates and staff, among other damaging effects. State agencies large and small report having overstretched staff with stagnant wages and low morale; inability to maintain buildings and equipment; and serious struggles to maintain quality services or perform their core mission. These cuts are rippling out to threaten entire communities, especially in areas of small town and rural Oklahoma where residents have fewer local resources to make up for disinvestment by the state.

Amid all of this turmoil, the Oklahoma Council of Public Affairs is working hard to convince lawmakers that our budget problems don’t exist. In a series they’re calling the “bogus budget”, they add up all of the spending by various state agencies and argue that if the total hasn’t plummeted, we don’t need to worry about their funding.

Continue Reading »

How much new revenue will ending oil and gas tax breaks bring in?

by | May 15th, 2017 | Posted in Taxes | Comments (3)

As the budget debate has intensified in recent weeks, legislators and advocates have heard dramatically different estimates of how much additional revenue could be raised by ending or reducing the special tax rate for oil and gas production. Some have claimed that ending the gross production tax break would only bring in an additional $20 million next year, while others have suggested the impact could be as high as $350 million.

A new memo prepared for OK Policy by two leading tax experts, Jerry Johnson and Michael Clingman, provides clarity to this issue. The memo explains why honest revenue estimates vary so greatly and presents solid numbers on how much additional revenue would be generated if GPT is increased to 5 percent or 7 percent on new wells. It finds that if the Legislature is willing to apply the higher rate to wells drilled prior to the law being passed, which is well within its legal authority, the state would generate from $150 million to $313 million more for next year’s budget.

Here’s a summary:

Continue Reading »

OCPA’s attack on OK Policy and ITEP doesn’t hold up

by | May 11th, 2017 | Posted in Press Releases & Statements, Taxes | Comments (1)

Last night, the Oklahoma Council on Public Affairs released a statement attacking the credibility and integrity of Oklahoma Policy Institute and the Institute on Taxation and Economic Policy (ITEP). They claim that a “Number of the Day” we cited from a report by ITEP regarding Devon Energy’s effective state corporate income tax rates from 2008 to 2015 is “not based on facts.” However, OCPA apparently did not look at or understand the methodology of the ITEP report, which fully explains where the numbers came from and how they were analyzed to make the best possible estimate of effective state corporate income tax rates.

In essence, the ITEP report reversed “impairment charges” that companies claim based on long-term projected values of oil and gas. These charges are an accounting fiction that have no effect on current income taxes or a company’s cash flow. Impairment charges are widely recognized by investors as separate from earnings and actual expenses when evaluating a company’s profitability and overall health. When calculated correctly, Devon Energy paid $71 million in state corporate income taxes over an eight-year period in which they recorded more than $21 billion in profits, for an effective tax rate of 0.3 percent.

Continue Reading »

Itemized deduction proposal has flaws, but opponents’ claims are overstated

by | May 11th, 2017 | Posted in Taxes | Comments (2)

With only a couple of week lefts in the Legislative session, lawmakers are scrambling to put together a budget that avoids devastating cuts to Oklahoma communities. The latest revenue idea to emerge is to limit itemized deductions to $17,000 per tax return, which would increase revenues by $107 million or $166 million, according to different estimates. This idea has been introduced as HB 2347 and approved by the House Joint Committee on Appropriations and Budget (JCAB), though it has recently been pulled from further consideration as lawmakers discuss revising it.

Itemized deduction reform is a promising state budget solution because it would not require the difficult-to-reach 3/4ths supermajority support for a tax rate increase under SQ 640. It also would not harm the large majority of low- and middle-income taxpayers who take the standard deduction instead of itemizing. Under HB 2347, even families and individuals who do itemize would not be affected unless they take more than $17,000 in deductions. A bill to freeze the standard deduction that would affect lower income taxpayers (HB 2348) has already been passed by the Legislature and sent to Governor Fallin, so HB 2347 would help ensure the cost of fixing Oklahoma’s budget shortfall is dispersed across both lower and higher-income households.

Continue Reading »

On revenue options, the right choice is “All of the Above”

by | May 10th, 2017 | Posted in Budget, Taxes | Comments (1)

With less than three weeks left in the legislative session, there is still no overall budget agreement. Facing a budget hole of close to $1 billion, a bipartisan consensus has emerged at the Capitol on the need for substantial new revenue to avert budget cuts that could have a catastrophic affect on Oklahoma communities and families. There is not yet, however, a firm consensus on which revenues to raise.

Republicans are promoting a $1.50-per-pack increase in the tobacco tax and a six-cent per gallon hike in the fuel tax. Democrats are holding out on both these measures, which require a three-fourths majority in both chambers to pass under the terms of State Question 640. Democrats are instead calling for an end to Oklahoma’s large tax break for oil and gas drilling, a change which Republicans are resisting. To attract Democratic votes, Republicans have introduced, but have not yet advanced, several revenue bills that contain aspects of the Democrats’ Restore Oklahoma budget plan. These include partly restoring the state Earned Income Tax Credit, narrowing the capital gains income tax exemption, and adopting combined corporate reporting. 

Which of these revenue measures should be approved? The right answer is “all of the above.”

Continue Reading »

Statement: Repeal of tax cut is a milestone for Oklahoma

Oklahoma Policy Institute released a statement in response to the Legislature’s final passage of SB 170, a bill to repeal an automatic income tax cut trigger:

The repeal of this tax cut is a milestone. After years of promises that income tax cuts would pay for themselves, a majority of lawmakers have finally begun to recognize the cost. We cannot afford more tax cuts that have drained resources from our communities without paying off in economic growth.

While repealing the next tax cut won’t help to resolve Oklahoma’s current budget shortfall, we hope that it begins the restoration of responsible budget and tax policies in the years ahead. This is also a hopeful sign that lawmakers now realize tax policy decisions should be based on current conditions, not automatic triggers created by prior Legislatures.

House and Senate vacancies should make passing revenue bills easier (Capitol Updates)

by | May 5th, 2017 | Posted in Capitol Updates, Taxes | Comments (3)

Steve Lewis served as Speaker of the Oklahoma House of Representatives from 1989-1991. He currently practices law in Tulsa and represents clients at the Capitol.

Several revenue-raising measures were introduced last week, and at least some will soon be making their way to the House and Senate floors for a vote. The revenue bills were introduced in the House and must be passed by 75 percent of the members of each chamber to become law. Discussion continues between House and Senate leaders and the governor’s office on which revenue bills to bring to a vote. A consensus seems to have developed that more revenue is necessary, but the debate now is over how much and how to raise it. A 75 percent vote on any controversial issue is a high bar, but it was intentionally created for revenue bills by the Oklahoma Constitution as the result of SQ 640 passed in 1992.

Continue Reading »

Itemized deduction reform is a promising state budget solution

by | May 2nd, 2017 | Posted in Taxes | Comments (2)

When Oklahomans filed their state income taxes in 2016, more than 70 percent of households used the standard deduction, which was $6,300 for individuals and $12,600 for married couples filing jointly. The remaining households itemized their deductions, adding up deductions for mortgage interest, charitable contributions, business expenses, and several other deductions allowed under federal and state tax laws.

Itemizing deductions is a strategy used almost entirely by wealthier households, since low- and medium-income households typically don’t spend enough on those categories to surpass the standard deduction. Overall, itemized deductions make our tax system more regressive by reducing tax bills for the wealthy but doing little for poor and middle class families who already pay the biggest share of their incomes in state and local taxes.

With Oklahoma lawmakers in search of solutions to fill a massive budget hole — especially solutions that won’t require a 3/4ths majority vote under SQ 640 — the time may be right to reform itemized deductions. Oklahoma is one of 17 states that follows the federal guidelines for itemized deductions, but 21 states with a state income tax either do not allow itemized deductions or limit them in ways that go beyond what’s allowed for federal taxes. Looking to these other states offers several models for itemized deduction reform to improve revenues for key state services:

Continue Reading »

We must end oil and gas tax breaks to save Oklahoma communities

by | April 24th, 2017 | Posted in Budget, Taxes | Comments (1)

Oklahoma is facing a genuine budget crisis. Our schools, care providers, correctional facilities, judicial system, and other critical functions have absorbed year after year of cuts and are losing the ability to fill their basic missions. The loss of these services threatens the viability of entire communities and the lives of vulnerable children, veterans, and seniors.

This year, we’re facing yet another budget shortfall of between $750 million and $1 billion, but we’ve exhausted many of the one-time revenue sources and budget gimmicks that barely got us through shortfalls in previous years.

To prevent catastrophic cuts and put our finances back on a sustainable course, lawmakers must raise new recurring revenues. Part of the solution needs to include ending tax breaks for the oil and gas industry and restoring the gross production tax to its historical level of 7 percent.

Continue Reading »

What happened to my refund?

It’s tax time again, and if you are one of the more than 300,000 Oklahoma households that claim the state Earned Income Tax Credit (EITC) you may have noticed that your tax refund is lower than it was last year, even if there was no change in your income. That’s because the Oklahoma Legislature slashed the state EITC to help close last year’s budget hole. The state EITC is no longer refundable in Oklahoma, so most people who qualify for the credit will no longer get the full benefit.

Continue Reading »

  1. Pages:
  2. 1
  3. 2
  4. 3
  5. 4
  6. 5
  7. 6
  8. 7
  9. ...
  10. 30