OKPOLICY.ORG
What if you gave away the biggest tax cut in Oklahoma history, and no one noticed?
That’s the reality facing the governor and the legislative leaders he’s trying to pressure to pass income tax cuts that benefit the wealthiest Oklahomans. Meanwhile, everyday families would get little more than pocket change.
Lawmakers last year eliminated the state’s portion of the grocery sales tax, the largest tax cut in state history. The governor sold it as an $800-a-year break for Oklahoma families. But the reality was that for a family earning $40,000, the savings amounted to less than $2 a week. That’s barely enough for a candy bar. That’s a low return for a tax cut that costs nearly $500 million annually in lost state revenue.
Now, the governor is pressuring lawmakers for across-the-board income and corporate income tax cuts that would reduce those rates by half a percent. When you run the numbers, though, these cuts reward the richest 1% of Oklahomans with nearly $6,000 back. The lowest-income families might get back $15, or enough to top off their gas tank. Meanwhile, the corporate income tax cuts will bypass local small businesses and mostly impact out-of-state companies.
These proposed cuts come as the nation braces for an economic slowdown. Oklahoma’s February revenue forecast showed a significant reduction due in large measure to the grocery tax cut and other economic factors. Since then, there has been growing concern about a national recession and wildly unpredictable federal funding. Long-term revenue cuts in this climate look downright reckless.
Some lawmakers have floated using the Rainy Day Fund to fill the gap. But that’s like signing up to buy a new car because you’ve got enough in the bank for the first payment. You might be fine for the first month or two, but it will catch up with you sooner rather than later. Using one-time state savings to pay for permanent tax cuts doesn’t make fiscal sense, and responsible lawmakers know this.
There are smarter ways to provide tax relief. Expanding the Sales Tax Relief Credit would target financial help to low- and middle-income families without gutting the budget. And unlike broad tax cuts, it’s flexible-able to grow or shrink with the economy.
If our leaders truly want to be good stewards of taxpayer dollars, now is the time to prove it. We need precise, targeted action-not sweeping giveaways that leave Oklahomans behind as essential services remain underfunded.
