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 email@example.com. You can sign up here to receive In The Know by e-mail.
Today you should know that a bill to require businesses, including online companies, with an Oklahoma presence to collect sales taxes was defeated in the House 41-43. OK Policy has previously written about this loophole for online retailers and what other states are doing about it. Local filmmakers say a plan to pay for income tax cuts by doing away with tax incentives would end Oklahoma’s film industry. The OK Policy Blog discusses an aspect of Governor Fallin’s tax plan that would throw family budgets into turmoil and make Oklahomans afraid to work.
The State Auditor criticized Education Department funds that spent $2.3 million over the past 10 years to pay for food and entertainment at state conferences. OU’s College of Education was awarded a seven-year, $26 million federal grant to improve college readiness and boost high school graduation rates among low-income students in OKC.
The Senate approved a new fee against anyone who has been sentenced to community service in order to fund an alternative sentencing program. The House voted to create a new formula for dividing veterans’ assets after a divorce.
The Number of the Day is the amount the state collected from the personal income tax in 2011. In today’s Policy Note, the National Poverty Center looks at the growing number of Americans living on less than $2 per day.
In The News
House defeats bill aimed at enforcing sales tax collections for online merchants
Rep. Pat Ownbey, R-Ardmore, said Wednesday that his HB 2586 was only intended to require businesses, including online companies, with an Oklahoma presence to collect sales taxes. He did not persuade enough of his colleagues that was a good idea, however. The bill failed 41-43. Several lawmakers said that not collecting taxes gives such companies a substantial advantage over brick-and-mortar stores. HB 2586 lists several situations in which a business would be considered as having a presence in the state for taxation purposes, including among others: selling a similar line of products as the vendor in question, under a similar name; using the same trademarks or names as the vendor; delivering, installing assembling or performing maintenance for the vendor, and facilitating delivery for the vendor by allowing customers to pick up purchases at a location maintained in this state.
Previously: More states push to end Amazon tax loophole. Will Oklahoma join them? from the OK Policy Blog
Filmmakers say cuts would end Oklahoma’s film industry
A plan to pay for income tax cuts by doing away with several tax credits and incentives is facing some push back from a group that contends the measure essentially would end moviemaking in Oklahoma. Senate Bill 1623 has made it past the state Senate Finance Committee and is awaiting further action in the Senate. Authored by Sen. Mike Mazzei, R-Tulsa, it would eliminate a number of special tax credits and subsidies in order to compensate for revenue lost by reducing the state’s top marginal income tax rate from 5.25 percent to 4.75 percent. However, some in Oklahoma’s film industry are organizing opposition to the measure, which would slash the 35 percent film incentive program reimbursement to 17.5 percent next year and eliminate it entirely in 2014. Many say the rebate, which has a $5 million annual cap, not only has attracted several movie productions to Oklahoma, but also helps grow the state’s independent film community.
Fallin off a cliff
The tax cut plans being pushed by Oklahoma lawmakers contain plenty of bad ideas, but one may eclipse them all: Governor Fallin’s tax cliff. The tax cliff is the result of a badly designed tax bracket structure. Very few other states have such a structure, and for good reason: it creates a major disincentive to work. In a normal rate structure, the higher rates only apply to income above a certain level. In Governor Fallin’s plan, entering a new bracket causes the higher rate to apply to every single dollar of taxable income. That means a family with $29,999 in taxable income would not owe any income tax. But if they earned one dollar more, their tax bill would jump to $675. When moving between the second and third bracket, their taxes would jump again by $875.
Audit questions Education Department fund
The state Education Department used two undisclosed bank accounts as slush funds for drinks, food, entertainment, travel and more to host state education conferences, spending $2.3 million over the past 10 years, according to an investigative state audit released Wednesday. The hidden accounts first appear on records in 1997 — seven years after former state schools Superintendent Sandy Garrett took office — and they were transferred to new accounts maintained by the Oklahoma State School Boards Association months before she left office in 2010. The slush funds allowed Education Department officials to pay for alcohol, food and lodging “shielded from governmental oversight as well as public scrutiny.” Garrett, who held office for 20 years, said the whole thing is a misunderstanding and that the creation and use of the funds was vetted by the attorney general at the time and the Education Department’s legal counsel.
U.S. Department of Education grant will help Oklahoma students prepare for college
Officials at the University of Oklahoma and the Oklahoma City School District say they expect a U.S. Department of Education grant will dramatically increase college preparedness among the city’s low-income students. The school district and OU’s Jeannine Rainbolt College of Education were awarded a seven-year, $26 million grant designed to improve college readiness and boost high school graduation rates. Staff from OU’s K20 Center for Educational and Community Renewal will work with about 4,500 sixth- and seventh-grade students at 10 low-income middle schools: Centennial, Douglas, Jackson, Jefferson, John Marshall, Northeast, Rogers, Roosevelt, Taft and Webster.
Senate approves funding mechanism for alternative sentencing program
A community service program initiated by an Oklahoma County commissioner two years ago, close to gaining a legal funding source, has the potential to go statewide. The state Senate on Wednesday unanimously approved Senate Bill 1875, which would allow judges to assess a fee against anyone who has been convicted of a crime and sentenced to community service. The fee would be used to support the SHINE program, which is a community service program developed by Oklahoma County Commissioner Brian Maughan. Full passage of the bill would allow the program to continue in Oklahoma County and give other counties an opportunity to participate, said Sen. David Holt, who authored the Senate version of the bill. Maughan’s SHINE program, which stands for Start Helping Impacted Neighborhoods Everywhere, was derailed for five months last year after it was determined the program’s supervisors and vehicle and equipment use could not be supported with the county’s highway funds.
House OKs bill to create new formula for dividing divorced veterans’ assets
A measure that establishes a formula for divorce judges to use to determine how to deal with extra earnings for military veterans with at least 20 years of service won House approval Wednesday. House Bill 2286 would set the number of years a spouse had been married to a military member to determine the amount of retainer pay the spouse is entitled to, said Rep. Emily Virgin, the measure’s author. HB 2286 passed the House 57-38. It now heads to the Senate. Under current law, when a couple divorces, the nonmilitary spouse can seek half of the military retainer pay. It has been a confusing, complicated debate for several years, mostly because of different opinions of how to handle military retention pay; some consider it a pension and others consider it wages.
Quote of the Day
We have a shortage of doctors in this state, but when you have bills like this being passed, those good quality OB-GYNs, those doctors that believe in your health, are going to go to other states where we can practice. Where we can have the tools to help the people in front of us and be allowed to use them.
–University of Oklahoma College of Medicine Mary Asal, on what Personhood may mean for the future of Oklahoma’s doctors
Number of the Day
Amount the state collected from the personal income tax in 2011
Source: Oklahoma Policy Institute
Extreme poverty in the United States, 1996 to 2011
Recently, there has been considerable discussion in the news media and by presidential candidates about the fact that nearly half of American households receive government benefits. However, a recent study suggests that a declining proportion of these benefits go to the poor, and what does go to the poor is more often in the form of in-kind benefits than cash. In fact the 1996 welfare reform ended the only cash entitlement program in the U.S. for poor families with children, replacing it with a program that offers time-limited cash assistance and requires able-bodied recipients to participate in work activities. … Thus, in the aftermath of the Great Recession while millions of American parents continue to experience long spells of unemployment, they have little access to means-tested income support programs. Has this produced a new group of American poor: households with children living on virtually no income?
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