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Save the Date: Our 2019 State Budget Summit is January 24, 2019. Tickets will go on sale Monday, December 10th. 

Court ruling gives Oklahoma the chance to fully fix online tax problem

by | October 23rd, 2018 | Posted in Blog, Taxes | Comments (1)

As online commerce has grown into an ever-increasing share of the U.S. economy, Oklahoma and other states have struggled with the problem of lost tax revenue from untaxed sales. A major Supreme Court ruling this past June, combined with actions by the Oklahoma Legislature and major online retailers, will largely address the problem and generate a substantial boost in tax revenue for state and local governments. But there one final step Oklahoma should still take to prevent the loss of revenue and ensure an even playing field for brick-and-mortar retailers and their online competitors.

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New analysis: Low-income taxpayers in Oklahoma pay more than twice the tax rate paid by the richest Oklahomans

by | October 17th, 2018 | Posted in Blog, Taxes | Comments (1)

While Oklahoma has a reputation as a low tax state, poor and middle-income Oklahomans are actually paying a greater share of their income in taxes than the national average, while the richest 5 percent of households — with annual incomes of $194,500 or more — pay less.

That’s why Oklahoma ranks among the ten worst states for tax inequality in the newly updated Who Pays report from the Institute on Taxation and Economic Policy (ITEP). The analysis evaluates major state and local taxes, including personal and corporate income taxes, property taxes, sales and other excise taxes. It finds that the poorest Oklahoma households pay 2.1 times as much of their incomes in taxes as the wealthiest 1 percent, and the middle 60 percent of households pay 1.7 times as much as the wealthiest. The poorest 20 percent of households pay the 5th highest taxes as a share of their incomes — 13.4 percent — in the country. You can read the full Who Pays report at and see the fact sheet for Oklahoma here.

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With SQ 800, Oklahoma voters to decide on saving fossil fuel revenues in a long-term endowment

by | September 26th, 2018 | Posted in Blog, Taxes | Comments (1)

Oklahoma will begin to set aside a portion of future oil and gas revenues for a new reserve fund if voters approve State Question 800 in November.

SQ 800 creates a new trust fund known as the Oklahoma Vision Fund in the state Constitution.  Five percent of the collections from the gross production tax on oil and gas would be deposited in the Fund beginning July 1, 2020 (FY 2021), and this allocation would increase by two-tenths percentage points every year. The fund would also consist of investment and income returns and any other appropriations made by the Legislature.

As of July 1, 2020, 4 percent of the average annual principal amount of the Fund over the preceding five years would be deposited to the General Revenue Fund. Up to five per cent of the monies in the Fund could also be used for debt obligations issued by the State of Oklahoma or local government entities.

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What we know – and don’t know – about the revenue bill veto challenge

by | May 23rd, 2018 | Posted in Blog, Budget, Education, Elections, Taxes | Comments (3)

In late March, on the eve of an anticipated teacher walk-out, Oklahoma lawmakers approved a series of bills intended to provide pay raises for teachers, school support staff, and state employees. To pay for the raises, lawmakers approved a number of revenue measures, including HB 1010xx, which managed to overcome the three-quarter supermajority requirement for tax increases established under State Question 640.

In May, a group called Oklahoma Taxpayers Unite launched a veto referendum petition drive that, if successful, would submit HB 1010xx to a vote of the people to approve or reject the new law. This effort has been designated Repeal Petition 25 (R.P. 25); if it gets on the ballot, it will be State Question 799. On June 22nd, the Oklahoma Supreme Court struck down the referendum petition, ruling that it was misleading and fatally flawed. The organizers subsequently announced that they were abandoning the petition effort, ensuring that both the tax increases and the pay raises would take effect on schedule.

This post addresses key questions related to the veto referendum effort. Language in bold reflects the Supreme Court’s June 22nd ruling, which renders moot much of the discussion on this page.  (Last Updated: July 9th)

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Unheralded law puts increased funding in doubt

by | April 18th, 2018 | Posted in Budget, Taxes | Comments (4)

Image by photosteve101/Creative Commons via flickr

Lawmakers this year have approved over half a billion in new taxes to pay for a package of spending measures, including increased pay for teachers, support staff, and state workers, and increased operating support for schools. While the new obligations are almost fully funded for the first year, in future years legislators are counting on growth revenue from an expanding economy to meet the spending commitments they’ve already made and to do more for education and other critical priorities.

But leaving economic uncertainties aside, there’s a hitch. Under a law passed quietly in 2016, several hundred million dollars could be directed automatically to a new budget reserve fund in FY 2020, rather than being available to meet funding commitments. Unless lawmakers revisit the law this session, they may find themselves facing major unexpected budget problems a year from now.

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Will the teacher raise be delayed by a veto petition?

by | April 12th, 2018 | Posted in Education, Taxes | Comments (19)

Tom Coburn speaking at OK Taxpayers Unite press conference

[Note: The post has been edited to correct the information regarding HB 1024xx]

On March 28th, just hours before Oklahoma Senators were to vote on pay raises for teachers and other employees funded by new taxes, a group calling themselves “Oklahoma Taxpayers Unite” held a press conference at the State Capitol. Led by former-U.S. Senator Tom Coburn, the group warned lawmakers that they would lead a citizen initiative to overturn any tax increase. Senators disregarded the warning by approving HB 1010xx with the three-quarters support needed for revenue bills, and the Governor quickly signed the measure into law on  March 29th. But is the tax increase – the first to be approved by Oklahoma lawmakers in over 25 years – now in danger of being overturned at the ballot and dragging the pay raises down with it?

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Oklahoma makes progress on collecting taxes from online sales

by | April 10th, 2018 | Posted in Taxes | Comments (0)

This session has seen the Oklahoma Legislature take a couple of important steps towards addressing the problem of untaxed online sales. These bills and reforms from earlier sessions are moving Oklahoma closer to an even playing field when it comes to taxation of online purchases versus purchases in brick-and-mortar stores. But it’s an impending decision by the U.S. Supreme Court that offers the best hope for a real and lasting solution to the problem.

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The real cost of the capital gains deduction could be much more than $100 million, but we have good options for reform

by | April 5th, 2018 | Posted in Taxes | Comments (11)

Oklahoma’s capital gains deduction is the most expensive tax incentive in the state, according to reports from the Oklahoma Tax Commission. In 2015-2016, this deduction cost $105 million, and it led to an estimated $474 million in forgone tax revenues from 2010 to 2014. Despite this massive cost, economic development consultants working with the state’s Incentive Evaluation Commission (IEC) found that Oklahoma has little to no evidence that the incentive is working to boost the economy. IEC member and University of Oklahoma economist Cynthia Rogers found that two-thirds of the tax break is taken by just over 800 households with annual incomes above $1 million. 

All of that is true, and yet it actually may substantially understate both the cost of the capital gains deduction and its skewed distributional impact. The statute on Oklahoma’s capital gains deduction does allow it to be taken on corporate income. But a footnote in the Oklahoma Tax Commission’s report on tax expenditures explains that, “While some of these deductions and exemptions are available for both corporate and individual income tax filers, aggregate data for corporate filers is not available. The tax expenditure estimates in this report, for deductions and exemptions that are available for both corporate and individual filers, reflect only individual income tax due to the data limitation.”

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The education funding package is a major step forward. There’s more work to do.

by | April 3rd, 2018 | Posted in Budget, Featured Budget & Tax, Taxes | Comments (3)

The Oklahoma Legislature last week passed a set of bills to provide pay raises to teachers, school support staff, and public employees funded primarily by a tax increase on tobacco, motor fuels, and gross production. Passage of the revenue bill was a truly landmark moment: it marked the first time that a major revenue bill has surpassed the three-quarters supermajority threshold for tax increases since passage of State Question 640 over a quarter-century ago, and it followed at least two years of intense but unsuccessful efforts to reach agreement on a grand bargain on the budget. More broadly, it signified a belated but clear recognition by Oklahoma lawmakers that renewed investment in education and other core services is critical for Oklahoma’s prosperity and requires significant new recurring revenue.

These bills mark a crucial step in tackling some of the state’s most urgent problems. But they in no way mark an end to the state’s budget challenges.  The new revenues fall short of fully funding new spending commitments. The state will also need additional revenue to balance this year’s budget and make greater investments in education and other needs in the future.

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Bill Watch: Next week in #okleg

This week we’re launching a new weekly update to our blog that previews some of the bills we’re watching in the Oklahoma Legislature over the next week. Throughout the week, we’ll continuing sharing advocacy alerts with ways that you can take action on key bills. Although there’s always potential for surprises in the legislative process, we hope this update will help you to be better prepared and informed about these key decisions being made for our state.

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