Oklahoma Policy Institute issued the following statement in response to the House of Representatives giving final passage to SB 1604, which makes the state Earned Income Tax Credit non-refundable, and SB 1606, which ends the “double deduction”:
The legislators who voted to slash Oklahoma’s Earned Income Tax Cut (EITC) have made a deplorable decision. They decided that more than 200,000 working families, most with children, will lose up to $300 per year. These legislators voted to worsen the daily struggles of families to make ends meet and increase the burden on private charities. The same low-income working families who will lose this credit already pay a much greater share of their income in state and local taxes than wealthier Oklahomans. By cutting the EITC, we are asking the working poor to shoulder even more of the load.
Legislative leaders say this move was needed as part of their plan to help fill the state’s massive budget shortfall. We must not forget that this shortfall was caused in significant part by Republican leaders’ obstinate insistence on moving ahead with a $150 million tax cut that primarily benefits high-income households, on top of a decade of tax cuts that have grown to more than $1 billion per year. In fact, this year’s tax cut for just the wealthiest 1 percent of households will cost the state more than what is saved from cutting the EITC.
At the same time, we are grateful that the Legislature has also voted to finally end the “double deduction”, a nonsensical tax break that served no public purpose and primarily benefited the wealthiest taxpayers who itemize deductions. Oklahoma Policy Institute has championed this reform for many years, and ending this tax break is a rare positive step towards a fairer tax system.
Even after these cuts to tax breaks, Oklahoma leaders have a monumental task to close a billion dollar budget shortfall without decimating critical services. Preventing this year’s income tax cut is still the most common sense option that continues to be ignored by legislative leaders. Lawmakers will not be able to adequately pay teachers or meet other serious needs of our economy and communities until they set aside the reckless tax policy that created Oklahoma’s chronic deficits.