In The Know: Economists, economic developers warn against eliminating the income tax

In The Know is a daily synopsis of Oklahoma policy-related news and blogs. Inclusion of a story does not necessarily mean endorsement by the Oklahoma Policy Institute. E-mail your suggestions for In The Know items to You can sign up here to receive In The Know by e-mail.

Economists and economic developers told a forum in Oklahoma City that phasing out the income tax would cost billions in revenue and do irreversible damage to the state’s economic health.  While Republicans repeated calls to lower the personal income tax rate, the head of the economics department at the University of Oklahoma told the forum that, “the math is so obviously insane it can’t work.”

A NewsOK editorial predicted that major tax cuts were off the table for the session.  Officials announced a plan to audit the American Indian Cultural Center project and it’s uncertain whether the state will fund completion of the museum.  Attorney General Scott Pruitt filed a motion in federal court to block a rule meant to reduce emissions of fine particulates and sulfur dioxide from coal-fired power plants.

House Speaker Kris Steele said that a bond issue to repair the crumbling state Capitol could be expanded to repair other buildings in the Capitol complex.  The University of Oklahoma announced plans to potentially transition to a more holistic admissions system. A statewide survey showed that most businesses plan to hire additional employees over the next three years.

In today’s Policy Note, Citizens for Tax Justice explained who pays taxes, including all of the taxes that most Americans are subject to — federal payroll taxes, federal excise taxes, state and local taxes, and the federal personal income tax.  The Number of the Day is the amount of animal waste produced annually in Oklahoma, 7th most in the nation.

In The News

Income tax-elimination effort flawed, say economists, economic developers

Quality Jobs going away is something that keeps me up at night,” Justin McLaughlin told an Oklahoma History Center audience Thursday afternoon. “That is one of the biggest benefits we could give to a company.”  McLaughlin, vice president of economic development for the Tulsa Metro Chamber, is not the only one worried about the state’s premiere, pay-as-you-go business-incentive program disappearing.  “It’s solely funded by the personal income tax,” Greater Oklahoma City Chamber President and CEO Roy Williams told a forum sponsored by the Oklahoma Policy Institute to look at this session’s push to substantially reduce or do away with the individual income tax.

Read more from 23rd & Lincoln at

Separate gatherings present polar views on proposals to cut Oklahoma’s personal income tax

Representatives from two neighboring states seeking to lower their personal income tax rates encouraged Oklahoma lawmakers Thursday to pass a tax cut this year while critics down the street called the tax-cutting proposals frightening.  “It can’t work,” said Alexander Holmes, who served as state finance director during former Gov. Henry Bellmon’s second term from 1987 to 1991. “The math is so obviously insane it can’t work.”  Holmes, a regents professor of economics and department chairman at the University of Oklahoma, said he worries that reducing the state’s personal income tax, without having another source of revenue to replace it or detailed cuts in state programs, will have a harmful effect on state services.

Read more from NewsOK at

Reforming Oklahoma tax code may take longer than many want

A money thing happened on the way to seriously cutting or eliminating the state personal income tax. What happened was an inability to find the money to pay for it.  More precisely, it was the inability to agree on what source of money would be tapped. Ending tax credits and deductions was the favored choice to offset an immediate 2 percentage point reduction in the top income tax rate. But those credits and deductions have friends in diverse places, from high-income developers down to modest-income retirees.

Read more from NewsOK at

An additional $40 million in state bond funds sought from lawmakers for OKC Indian museum gets boost

Efforts to complete the American Indian Cultural Center and Museum have received a tentative boost.  Officials announced Thursday that the project would have to undergo an audit, submit a completion plan with a full accounting of costs and be subject to legislation to move it under the Oklahoma Department of Tourism and Recreation.  Completion of those requirements would be necessary before lawmakers would consider additional funding.  But even if backers successfully completed the steps, there was no guarantee that funding would be forthcoming.  Some lawmakers have been critical of providing more state funding for a project that already has received three bond issues totaling $67.4 million.

Read more from the Tulsa World at

AG’s motion targets EPA haze rule

Oklahoma Attorney General Scott Pruitt has filed a motion in federal court trying to block implementation of a rule designed to reduce pollutants emitted from the state’s oldest coal-fired power plants.  The motion, filed Wednesday with the 10th U.S. Circuit Court of Appeals in Denver, was submitted on behalf of the state, Oklahoma Gas and Electric Co. and Oklahoma Industrial Energy Consumers.  The move drew fire from members of the Sierra Club, which has intervened in the federal lawsuit. They questioned Pruitt’s decision to team up with the public utility and a special interest group.

Read more from the Muskogee Phoenix at

Capitol repairs could be part of bigger bond issue, Oklahoma House speaker says

A bond issue to repair the crumbling state Capitol could be expanded to make repairs to other buildings in the Capitol complex, House Speaker Kris Steele said Thursday.  Steele, R-Shawnee, conceded that a proposed $140 million bond issue to repair and renovate the nearly 100-year-old state Capitol has opponents from both sides of the political aisle in the House of Representatives.  “Certainly there’s not unanimous support,” he said. “There are those that have reservations and those that have expressed opposition no matter what the proposal is. More and more individuals within our caucus have expressed an interest in pursuing a bond proposal to take care of what they define as the people’s building.”

Read more from NewsOK at

University of Oklahoma looks to replace current admission system

Proposed changes to the University of Oklahoma’s admissions policy could allow the university to admit certain students who might have been rejected under the current system.  OU officials hope to see the university adopt a holistic admissions system. Under that system, the university would consider a range of criteria officials say would give them a better idea of applicants’ chances for success.  The OU Board of Regents approved the new approach at a meeting last week. The proposal will go before the Oklahoma Regents for Higher Education for consideration later this month. If approved, it would take effect in fall 2013.

Read more from NewsOK at

Business optimism, hiring outlook rise in recent survey

A statewide survey shows that 37 percent of businesses plan to hire additional employees in 2012 and 69 percent plan to hire during the next three years.  The findings from a recently released survey organized by Gov. Mary Fallin and the Oklahoma Department of Commerce compared favorably to a national average of just 28 percent of businesses planning to hire this year.  Additionally, 78 percent of business leaders polled in the survey indicated they are optimistic about the future for business in the state and are confident their business will grow, compared with 60 percent nationally.

Read more from the Tulsa World at

Quote of the Day

Now is not the time to settle for a minor reduction.  Now is the time to double the powder and shorten the fuse.

Brian Bush, Vice President of the Oklahoma Council on Public Affairs, on efforts to eliminate the state’s income tax

Number of the Day


Tons of animal waste produced annually in Oklahoma, 7th in the nation in 2007

Source: U.S. Census of Agriculture via The Pollution Information Site

See previous Numbers of the Day here.

Policy Note

Who Pays Taxes in America?

It’s often claimed that the richest Americans pay a disproportionate share of taxes while those in the bottom half pay nothing. These claims ignore the many taxes that most Americans are subject to — federal payroll taxes, federal excise taxes, state and local taxes — and focus instead on just one tax, the federal personal income tax. The other taxes are mostly regressive, meaning they take a larger share of income from a poor or middle-income family than they take from a rich family.

Read more from Citizens for Tax Justice at

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