Gov. Stitt this week appeared on the national news to suggest that Oklahoma should eliminate its state income tax. Such short-sighted comments ignore the realities of governing.
The individual income tax is Oklahoma’s largest single revenue source for state government operations, accounting for more than 1 in 3 of every dollar collected for state tax revenue. In FY 2022, the individual income tax brought in more than $4 billion that was used for delivering state programs for public safety, transportation, education, public health, and much more.
The money for basic government services has to come from somewhere. Without the individual income tax in Oklahoma to pay for government operations, elected officials would have only two disastrous options:
- Radically reduce or eliminate public services, which would harm our schools, worsen our roads, deplete public safety, and lower our overall well-being in a state that already finds itself on the bottom 10 of too many quality of life metrics.
- Raise an equal amount of revenue from other sources, including property taxes and expanded taxation on goods and services.
While some politicians like to point to states that don’t have income taxes — most notably Texas and Florida — folks in those states pay some of the highest sales and property taxes in the country.
Oklahoma lawmakers have lowered the state’s individual income tax several times during the past 20 years in the name of economic development, but the reality is that our state’s economic position and overall quality of life have worsened as lawmakers cut taxes.
Many politicians like to talk about folks pulling themselves up by their bootstraps, but too many Oklahomans are born into poverty and lack basic necessities, let alone boots. Shared public services allow our state to function. Rather than floating ways to defund these shared services, our elected officials should be looking for policy solutions that lower taxes for low- and moderate-income Oklahomans while asking our state’s richest residents to pay their fair share.
One example is the Sales Tax Relief Credit, which would provide targeted tax relief to nearly half a million low- and moderate-income taxpayers — more than half of which are seniors. Last session, lawmakers found the political will and budget appropriations to lower taxes for Oklahoma families who could already afford to send their children to private school. Imagine what our state could accomplish if they found that same willpower to support Oklahomans who most need financial relief.
For additional options, OK Policy has already done some of that homework. In 2021, we published A Better Path Forward: A Budget and Tax Roadmap for Oklahoma, which includes a menu of more than 30 budget and tax reforms that can provide vital state revenue while bringing more fairness to the state’s tax system. We encourage lawmakers — and the general public — to learn more before they get sold a bill of goods that will harm Oklahoma’s long-term future.