Graph of the Day: Tax collections at historic lows

The share of income Oklahomans pay in state taxes has fallen to its lowest point in decades.  In 2010, Oklahomans paid just 5.5 percent of their total income in state taxes.  This includes sales tax, income tax, motor vehicle tax, excise taxes on oil and gas production, and all other state taxes. This is a major drop from the average of 6.9 percent over the past three decades, and it is well below the previous low of 6.1 percent in 1987 and 2009.

As the graph shows, the share of income paid in taxes has been falling since 2006. In 2007 and 2008, collections grew but less rapidly than the state economy as the income tax cuts of the mid-2000s phased in. Once the state was hit by the recession in 2009, collections fell for two straight years, with 2010 collections coming in 15 percent below 2008.. During the same period, state personal income  contracted by 4 percent.

Even before the latest steep drop, Oklahoma was among the lowest tax states in the nation, ranking 40th in total state and local taxes as a share of personal income in 2009.  As we struggle through an incomplete recovery, and with tax cuts back on the front burner of the political agenda, the failure of our tax collections to keep pace with growing costs and growing needs raises critical questions of how we can meet the core responsibilities that Oklahomans expect from state government.