By Matt Trotter
Republicans now have competing federal tax reform plans, but the more it resembles the House proposal, the more it will benefit wealthy Oklahomans.
An analysis of that plan finds Oklahomans making roughly $500,000 a year or more will see the most benefits. Both immediately and 10 years from now, they’ll get a bigger tax cut in proportion to their incomes and they’ll be at a much lower risk of a tax hike than all but the poorest 20 percent of Oklahomans.
“This is especially troubling because the very wealthiest have also been taking the large majority of all the income growth in the economy for quite a few years now, so these are folks that are doing better than ever before,” said Gene Perry with Oklahoma Policy Institute.
While the Senate plan is still being analyzed, the House plan would save Oklahomans making more than $500,000 a year nearly 4 percent of their pre-tax income by 2027, while those making less than $60,000 would save less than 1 percent.
Under the House proposal, around one in five middle-income Oklahoma families would see a tax increase by 2027. Just one in 50 of the wealthiest 1 percent of families would face a tax hike.
Either plan is expected to add roughly $1.5 trillion to the federal deficit over the next decade, which could pay for a lot of things to help struggling families.
“This $1.5 trillion, it would be enough to double the Pell Grant programs for college students, double cancer research, do child care assistance for 6 million children, provide opioid addiction treatment to 300,000 people and train 3.5 million workers for in-demand jobs,” Perry said.
That sort of increase in the federal deficit will likely lead to federal cuts to nutrition assistance, Medicaid and college aid programs that help middle- and low-income families, leaving the state to pick up the slack.
“Anyone in Oklahoma who’s been paying attention should know that we really can’t afford to have more costs shifted down to us right now,” Perry said. “So, this would put more pressure on us and likely lead to even more struggles to pass a budget and get revenues at the state level.”
Senator James Lankford said he’ll vote no if a tax plan increases the deficit too much.
“It’s one thing to be able to cut taxes. It’s another thing to say, ‘How are we going to deal with our debt and deficit?'” Lankford said.
President Trump wants to sign a tax bill by Christmas, giving Republicans in the U.S House and Senate a short time to reconcile their differing proposals.