Oklahoma continues to rank high for state and local sales-tax rates (Tulsa World)


Oklahomans continue to pay some of the highest combined state and local sales taxes in the country, according to an annual report by the Tax Foundation.

At 8.78 percent, Oklahoma’s average combined sales-tax rate was slightly higher than last year’s 8.72 percent, but the state dropped from fifth to sixth in the rankings.


Alabama, sixth a year ago, moved up to fourth.

The rankings are calculated by adding state sales taxes — 4.5 percent in Oklahoma — to an average of all local sales taxes, including those charged by counties and special assessment districts.

According to other Tax Foundation assessments, Oklahoma ranks fairly low for most other state and local taxes. Such studies tend to combine state and local taxes because of the variations in the ways state and local governments are funded and operated.

For 2012, the last year for which data is available, the Tax Foundation ranked Oklahoma 38th in total per capita state and local tax collections.

Since then, Oklahoma has cut its top income tax rate and adjusted its gross-production tax laws in a way that many observers believe amounts to an overall reduction.

Cutting the state’s sales tax, however, hardly ever comes up.

“For politicians, a sales tax is lots of times the only one they’ll consider raising,” said David Blatt of the Oklahoma Policy Institute.

Oklahoma is unusually dependent on sales taxes because of moderate-to-low income and excise taxes, and some of the lowest property taxes in the nation. Oklahoma is the only state in which municipal governments — barring some creative accounting — cannot use property-tax revenues for general operation.

Thus, municipalities are almost completely dependent on sales taxes.

And because the rest of the state’s tax base has slowly eroded, the state, too, is loath to consider reducing the sales tax.

Another factor is that several influential policy makers believe that reducing or eliminating the income tax is the key to economic growth and that sales taxes are fairer and easier to administer.

Jonathan Small of the Oklahoma Council of Public Affairs said that “any tax is a burden, but our state income tax continues to prohibit economic growth for Oklahomans.”

“Our state has lost multiple thousands of jobs … that have relocated from Oklahoma to states with no personal income tax,” Small said. “Evidence and experience indicate that taxes on people’s paychecks and income are more likely to suppress economic growth and job creation than taxes on what people buy.”

But there are some problems with the sales tax. It’s regressive, meaning it hits low-income households harder. This is particularly true in Oklahoma, which is one of just six states that tax groceries at the same rate as other goods.

“It’s a little disingenuous to say sales taxes affect everyone equally,” Blatt said.

“Statistics consistently show those with low incomes pay a greater share of their income in state and local taxes,” he said.

Sales taxes are also being collected on a shrinking share of the economy. Between the expansion of the service sector, which is not taxed, and online sales, which are taxed but through voluntary remittance, the tax’s base has not kept pace with overall expansion.

“Ideally, you should have some balance,” said Blatt. “What we have is a need for overall tax reform.”



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