Congressional tax plan would take Oklahoma’s budget mess national

Oklahomans have learned the hard way what happens when you enact massive tax cuts without saying how you will pay for them. In the mid-2000s, we began slashing our top income tax rate. When Oklahoma first started cutting taxes, the economy was booming with revenues to spare. The tax cuts were also phased in with triggers over time, so we didn’t see the full cost right away.

With every passing year, it’s become harder to ignore the cost. In the past decade, Oklahoma’s made the largest cuts in the nation to K-12 school formula funding and higher education. Most state agencies now have 20 to 40 percent less funding compared to 2009. This year, Republicans and Democrats alike were talking about Oklahoma’s structural budget deficit and the ways that budget cuts are dismantling essential state services and harming Oklahoma families. That’s why a supermajority of legislators voted to raise taxes in special session (though in the House that vote was unfortunately just short of the super-supermajority required by State Question 640).

Still, most Oklahomans now understand the danger of cutting taxes without paying for it. Unfortunately, our representatives in Washington DC are pushing to repeat that mistake for the whole nation. President Trump and Republican leaders in Congress are pushing a tax plan that would add $1.5 trillion or more to the deficit and lead to deep program cuts, including many programs that are important to Oklahoma families and support our state budget. In fact Congressional Republicans are already telegraphing that they plan to follow up their deficit-exploding tax plan with equally severe budget cuts. As the Center on Budget and Policy Priorities explains:

The budget resolution that Congress adopted this month calls for $5.8 trillion in program cuts over the coming decade. These include $1.8 trillion in cuts in Medicaid, Medicare, and other health care entitlement programs and $800 billion in cuts below the already austere sequestration levels in “non-defense discretionary” programs, the budget area that includes education and training, transportation, scientific and medical research, protection of the food and water supply, child care, low-income housing assistance, services for frail elderly people, and much more.

Besides cutting programs important to Oklahomans, these budget plans undermine federal grants to states that right now bring billions of dollars to Oklahoma every year — amounting to nearly one-third of the state budget. Even if these budget plans are stopped, passage of the GOP tax plan would force automatic cuts to Medicare, student loans, and other programs next year because of PAYGO rules for Congress. 

This tax plan would gut programs needed by poor and middle-income Oklahomans, but at least they get a tax cut, right? Unfortunately, many will not. The plan recently passed by the House would provide little tax reduction or would actually increase taxes on many of these families, and the Senate version makes that trade-off even harsher. Americans making under $30,000 a year or below would pay higher taxes in 2021 under the Senate bill, while those making $75,000 or less would also face large increases by 2027, according to an analysis by the congressional Joint Committee on Taxation.

In Oklahoma, we’ve already seen the destructive impact of policies that pair regressive tax cuts with budget cuts to core public services. It hasn’t paid off in economic growth or improved the life of a typical Oklahoma family. It has left us struggling to keep teachers, offer basic health services, and maintain the infrastructure that is the real foundation of economic prosperity.

Oklahomans now know better, which may be why Oklahoma Senator James Lankford has said he won’t support a tax plan that increases the debt and deficit too much. It’s likely that Senator Lankford will face great pressure from the Congressional Republicans who are trying to ram this bill through. Oklahomans should encourage Senator Lankford to stand up to this pressure, keep his promise, and reject this deficit-busting tax bill.

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Gene Perry worked for OK Policy from 2011 to 2019. He is a native Oklahoman and a citizen of the Cherokee Nation. He graduated from the University of Oklahoma with a B.A. in history and an M.A. in journalism.

2 thoughts on “Congressional tax plan would take Oklahoma’s budget mess national

  1. He won’t support it because Oklahoma is a federal welfare state , while it steals tax payer dollars to support their fundies , and throws the tax payer crumbs . all the while in-larging departments and funneling money to their colonies. I support the Tax plan as long as they do something for the people , GET RID OF THE MANDATE ! this is not russia when the government makes demands of the people , its the other way around and I think most of you up their have forgotten this . this is america ! and we have a ” right ” to choose ! not government make demands or declare therm selves GODS! see you at the polls Lankford , make sure you have another job lined up .

  2. Unfortunately, you have conflated a currency user (states and local governments, in addition to households) with a currency creator (since Nixon closed the gold window, the U.S. has a sovereign, fiat currency that it can issue without limit).

    If taxes provision the federal government, then where do taxpayers get the dollars with which they pay taxes if the government doesn’t spend them out into the economy first.

    Both “liberals” and “conservatives” misunderstand this basic fact about money: Sovereign fiat currency creators are the only fiscally unconstrained players in the economy. The cult of “fiscal responsibility” that demands “balanced” federal budgets is bipartisan, and clearly unsuccessful. See for more info.

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