OKPOLICY.ORG
This column originally ran Feb. 5, 2025 in The Journal Record
During his State of the State address, the governor again pitched plans to cut – and eventually eliminate – Oklahoma’s personal income tax. This so-called “path to zero” is really a dangerous road to the bottom.
Supporters say they’re delivering financial relief to Oklahoma families, but the only true winners are the richest 1%. The first step in the governor’s plan is cutting the income tax rate by half a percent. This would put nearly $6,000 a year into the pockets of our wealthiest residents, while our lowest earners would see a mere $15-not enough to fill a gas tank.
Oklahoma is not in a position for yet another tax cut. The Board of Equalization’s December forecast predicted lower revenues next year. A 2024 budget stress test revealed the state is unprepared for anything beyond a mild recession. And the recent chaos over the federal grants freeze exposed the precarious nature of federal dollars that fund more than 40% of state programs and services.
More concerning is the end goal for these tax proposals: eliminating income taxes entirely. Such drastic measures would wipe out more than 1 of every 3 dollars appropriated by the state – money that pays for roads, public safety, and more. Given that Oklahoma already ranks in the bottom 10 states for many quality-of-life measures, is it safe to cut even more?
Without an income tax, where would lawmakers get revenue to pay for essential services? Higher sales taxes. New taxes on goods and services. Higher local property taxes when the state shifts costs to local government? (Ask your Texas friends how they feel about their property taxes.) These new taxes would hit working families, seniors, and small businesses the hardest.
Once a tax cut is in place, reversing it is nearly impossible. Over the last two decades, repeated tax cuts have drained more than $2 billion annually from the state budget, making it harder to fund education, health care, and infrastructure.
Instead of permanent tax cuts that primarily benefit the wealthy, lawmakers should focus on modernizing tax credits like the Sales Tax Relief Credit and Earned Income Tax Credit. They are targeted, less expensive, and can be adjusted without creating long-term budget shortfalls.
Oklahoma can’t afford another round of reckless tax cuts. It’s time for a smarter, fairer approach to tax policy-one that prioritizes all Oklahomans, not just the top 1%.
