A new issue brief released today is the first of a seven part series by OK Policy to propose public policy action items for Oklahoma. These recommendations are aimed at improving the shared prosperity of all Oklahomans while maintaining a fiscally responsible state budget.
The first installment discusses reforms for Oklahoma to create a 21st Century revenue system for a 21st century economy. To prosper in coming decades, Oklahoma needs a well-educated workforce, functioning infrastructure, healthy families, and secure communities. Reaching these goals requires a tax system capable of generating enough revenue to fund the core public services on which our prosperity depends.
However, our current tax system has become riddled with loopholes that reduce revenue collections and place a greater share of the tax load on a narrower base of taxpayers. As we look further ahead, we see that growing funding obligations and ever-larger holes in our tax system are creating a fiscal gap, or structural budget deficit, between revenue collections and rising costs.
In the brief, OK Policy lays out a series of action items aimed at reforming our tax system. The action items propose changes to the state’s income tax, sales tax, and gross production tax, along with new budgeting measures to ensure future tax and spending proposals are affordable and sustainable.
The brief proposes that Oklahoma:
- Modernize the income tax by eliminating inefficient tax credits, limiting itemized deductions, adopting combined corporate reporting, and taxing less income at the top rate.
- Modernize the sales tax by taxing selected services, eliminating sales tax exemptions, collecting tax on online sales, and eliminating the sales tax on groceries.
- Strengthen the gross production tax by eliminating unnecessary exemptions.
- Make sure that future tax and spending proposals are affordable and sustainable by adopting PAY-GO requirements.
For too long, Oklahoma has not had a sensible debate on tax policy. In the mid-2000s, the state approved deep, permanent tax cuts that were only fully phased in after the economy faltered. Recent proposals have focused narrowly on cutting the top personal income rate, with wildly optimistic promises that this will lead to massive economic growth.
The tax reform action items show that there is another way. Through key reforms to Oklahoma’s tax code, we can ensure adequate revenues to perform the essential functions of state government while making the tax code fairer for Oklahoma families and businesses.
You can click here for the full 6-page tax reform action items brief. Future action item installments will focus on criminal justice, education, energy, financial security, health care, and jobs.