OKPOLICY.ORG
Increasing focus is on repealing the capital gains tax break as a solution to fully fund state budget needs and resolve a teacher walkout. A repeal bill (SB 1086) has already passed the Senate with a bipartisan 30-10 majority. It has been placed on the House calendar so that it can go straight to a vote in the full House at any time, but so far House leadership has not brought it to a vote.
Key Points
Oklahoma’s capital gain deduction allows income from the sale of Oklahoma real estate or stock in an Oklahoma-based firm to go fully untaxed.
- The capital gains tax break is costing Oklahoma hundreds of millions without paying off in economic growth. Economic development experts working with Oklahoma’s Incentive Evaluation Commission concluded that this tax break reduced state revenues by $474 million from 2010 to 2014 while creating only $9 million in revenue growth, for a net cost of $465 million. Corporations can also claim the capital gains deduction, but there is no public information on how much that part of the tax break is costing the state.
- The capital gains tax break is poorly targeted and poorly monitored. Unlike similar capital gains deductions in other states that have them, Oklahoma’s deduction is not targeted to any specific industry and has no requirement that gains from this tax break be re-invested in Oklahoma.
- The capital gains tax break benefits a small number of households at the expense of most Oklahomans. The capital gains deduction costs more than $100 million going to less than 20,000 households, or barely 1 percent of all households filing tax returns in Oklahoma. In 2014, nearly two-thirds (64 percent) of the benefit went just 824 households with incomes of more than $1 million.
- Ending the capital gains tax break is supported by Oklahoma voters. Fifty-five percent of Oklahoma registered voters favor ending the capital gains tax break, compared to just 35 who would oppose ending it, according to a recent poll by Global Strategy Group for OK Policy that looked at various revenue ideas for the state budget.
- Lawmakers could also reform the capital gains deduction to protect farmers, middle-income Oklahomans, or other favored groups while still eliminating most of the cost of this large tax break. Even if lawmakers decide to keep the capital gains deduction in some form, that can be done without handing out unknown amounts of money to unknown entities. We can limit the deduction to cap its costs and to make sure that it actually incentivizes economic growth in a way that helps the state as a whole. (Read more about possible reforms here.)
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The Bottom Line
Oklahoma’s capital gains tax break is shown to be a wasteful loophole and inefficient use of tax dollars. Lawmakers should repeal this tax break to ensure a broad-based tax system that works for all Oklahomans without unduly burdening or supporting any small group of people.
Please ask your state Representative to support SB 1086 to sunset the capital gains deduction in 2018.
Hi there! I may have missed something but it does not seem clear whether this repeal applies to capital gains on residential properties that are primary residences. A repeal makes sense if it only applies to capital gains on commercial properties or residential investment properties. However, repealing capital gains could disproportionately impact low to middle class homeowners, particularly seniors, if it applies to homes that are established primary residences of the homeowners. Again, I may have just missed something here but would appreciate some clarification. Have a great day!
Hi Carol, capital gains on a property that someone is using as their primary residence is exempt from taxes under a different provision, so that would not be affected by this repeal. It would only affect capital gains from the sale of investment properties and stocks.
How does the capital gains deductions help us now with sale of land and Ok stock?
You are penalizing seniors who have saved and worked all their adult life to have financial security in their later years.
You are not being open with your readers and supporters if you do not explain how this is going to effect people who have worked their whole life to be able to care for themselves as they age. We are not millionaires and have paid our taxes for over 50 years.
So, I get screwed because I bust my butt to get ahead in life and invest my money in real estate. I get hammered enough with federal capital gains, I have no kids, so why do I need to pay more taxes for Education. I’m all for better education, and donate. But stop trying to force me to pay for other people. Here’s a novel idea, charge a per child education tax, let those with the children pay for the teachers.
The Capital Gains repeal would only hurt those that have an income of a Million dollars or more. This would fix serious shortfalls in our State budget. Once again the average Oklahomans gets punished for the rich. We need to call our State Senate and Rep support SB 1086
You just screwed every senior citizen & home owner in the entire state.It looks to me if we sell our home to down size or get married & combine 2 homes into 1 we pay a 4% tax on the sale of our property. My Girl friend & I are both home owners. My Kids all live out of state & are grown,hers are out of town & are also grown. If we sell 2 houses & buy another we get hit 2x & we didn’t even get kissed & I sure don’t like paying for every body else’s kid to go to school. I paid every thing it took to get mine through school & supported every fund raised or drive for funds they threw at us. There is plenty of money in the schools system there needs to be a serious reduction in the amount of administrators & waste. I like the idea the fellow before had a per child education tax for every child enrolled in school. I also do not believe we should be supporting major university’s with huge athletic programs. These University’s have millions coming into their coffers,let them pay their own way. It seems to me there’s enough money there they could even do away with tuition entirely but then there would be enough for the head honcho to skim some & pay millions in salaries to foot ball coaches. Thanks for screwing all of us who have worked all our life to get ahead for the last 60 years !!
they ruled this out because we have already been here several years ago, their was a big law suit over this and dysfunctional as oklahoma is they caved , we cannot afford another one on this issue , commerce , and corporations would file another one , this is bad for business as well as commerce . this state just seems to go around in circles , and without logic . how sad is that . even Fox news said so .
Dear Gary,
Please accept my humble effort to rewrite your post above. My shorter version of your screen would be:: “I’ve got mine Jack. Screw you”.
So now that your kids are out of school you don’t want to pay for those that follow yours? As self serving and misguided as that remark is you top it with your totaling misinformed commentary about universities, football coaches, tuition, etc.
Please hurry up and move to Texas where there is no personal income tax but the property taxes are two to three times higher down there to support public schools and that’s just one reason why many of our teachers you helped educate are living in the Lone Star state.
Also they have a terrible football team at UT but since they are losers you will feel right at home.
You embody everything that is wrong with Okies who know the cost of everything and the value of nothing.
Dear Sirs,
Please support SB 1086 to repeal the Capital Gains
Tax. Please also support Funding Education for
Oklahoma Children.
Thank you,
Margaret Sipes
Pleas e vote yes on SB 1086. Our children and grandchildren need and deserve a quality education. Thank You. Mike Shamblin
I actually hope it gets repealed. There is no since in people that make over a million dollars to just get richer why should we have tax breaks in place to ensure they get richer.