Oklahoma Has the 16th Most Unfair State and Local Sales Tax System, Report Says (Tulsa World)

Oklahoma has the 16th most unfair state and local tax system in the country, says a report released Wednesday.

In Oklahoma, the bottom 80 percent of taxpayers are paying between 8.6 percent and 10.5 percent of their incomes in state and local taxes, according to the “2015 Who Pays: A Distributional Analysis of the Tax Systems in All Fifty States” from the Institute on Taxation and Economic Policy.

Meanwhile, the wealthiest 1 percent of households pay 4.3 percent, the report says.

It defines the bottom 80 percent as households earning less than $89,000 a year, while the wealthiest are those above $418,000 a year.

“When you look at all Oklahoma’s state and local taxes, it’s clear that the system is unfair,” said Gene Perry, Oklahoma Policy Institute policy director. “The less you make, the higher percentage you pay.”

Carl Davis, a senior analyst with the ITE, said part of the problem is Oklahoma has a sales tax on groceries. As a result, those making at the lower scale of the income ruler pay a larger percentage of the budget in sales tax, he said.

Another problem is Oklahoma’s flat and outdated tax brackets, which have not been updated or indexed with inflation, he said.

Most Oklahomans fall in the highest income tax bracket at 5.25 percent. The top bracket kicks in at $15,000 a year compared to the federal top income bracket which kicks in at $450,000, Davis said.

It is the first time his group has done a state ranking.

A state panel recently announced that there was enough projected revenue growth to reduce the state’s top income tax rate to 5 percent from 5.25 in 2016.

It could be reduced further to 4.85 percent.

“The legislature and the governor keep pushing tax cuts for top earners, but they haven’t done a thing for the Oklahomans who most need a break,” Perry said. “Meanwhile, many of these same low and middle-income families have felt the worst effects of Oklahoma’s cuts to education and health care.”

The Oklahoma Policy Institute strongly opposed the tax cut passed last session.

Studies have shown the growing divide between the wealthy and everyone else, said Matt Gardner, Institute on Taxation and Economic Policy executive director.

“Upside-down state tax systems didn’t cause the growing income divide, but they certainly exacerbate the problem,” he said. “State policymakers shouldn’t wring their hands or ignore the problem. They should thoroughly explore and enact tax reform policies that will make their tax systems fairer.”

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