Oklahoma’s Poor and Middle Income Families Pay a Higher Percentage in State, Local Taxes

(Oklahoma City, Nov. 18, 2009): State and local taxes take a bigger toll on the incomes of Oklahoma’s low- and moderate-income households than on higher-income households, according to a new study by the Institute on Taxation and Economic Policy, a non-partisan research and education organization focused on government taxation and spending policies. The study measures state and local taxes paid by different income groups, and reveals that low and moderate-income Oklahomans pay a greater percentage of their incomes in taxes than those with higher incomes.

The study found that the state’s sales, excise and property taxes, which fall disproportionately on the lowest income families, are the primary cause of low- and middle- income households paying a higher proportion of their income in taxes. Overall, the report found that families with incomes under $50,000 pay between nine and 10 percent of their incomes in state and local taxes, while families with income over $400,000 pay just over 5.5 percent.  

“Oklahoma lawmakers may be forced to make difficult tax and spending decisions in the upcoming year,” said Matthew Gardner, ITEP’s executive director and lead author of the study Who Pays? A Distributional Analysis of the Tax Systems in All 50 States. “They should be mindful that the Oklahoma tax system already falls most heavily on the very poorest families in the state.”

At the same time, a recent report from the Center on Budget Policy and Priorities reveals that Oklahoma has made some progress over the past decade to decrease the comparatively higher percentage of income paid in taxes by low- and moderate-income families. As a result of a number of policy changes enacted in recent years – including an increase in the standard deduction and the creation of a state Earned Income Tax Credit (EITC) and state child tax credit – Oklahoma families below the poverty level are no longer subjected to the state income tax.

“It is encouraging to see the progress that Oklahoma has made in adjusting the disproportionately high percent of income paid in taxes by middle- and low-income families,” said Matt Guillory, executive director of Oklahoma Policy Institute. “An imbalance still exists though, and there is progress yet to be made. A tax system where the percentage paid across all income groups was more balanced would reduce the tax impacts on the average Oklahoma family and would provide them more resources to meet current needs and invest in their future.”

Among the options for tax reform that would create a more balanced tax system are increasing the state EITC, strengthening the sales tax credit that offsets the sales tax on groceries, increasing the personal exemption, stretching out our tax brackets to allow more initial income to be taxed at lower rates, and providing a property tax credit for renters.

For more information on the report please visit www.okpolicy.org/new-who-pays-report-itepor contact David Blatt at 918-859-8747.


Oklahoma Policy Insititute (OK Policy) advances equitable and fiscally responsible policies that expand opportunity for all Oklahomans through non-partisan research, analysis, and advocacy.

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