OKPOLICY.ORG
Contact: David Blatt, (918) 794-3944, dblatt@okpolicy.org
A proposal by the legislature’s tax reform task force would raise taxes for 55 percent of Oklahomans, with the worst impact on low-income seniors and families with children, according to a new analysis from the Oklahoma Policy Institute and the Institute on Taxation and Economic Policy. The task force suggested paying for further cuts to the top income tax rate by ending numerous tax credits and exemptions relied on by low and moderate income Oklahomans.
“Because the proposal eliminates the personal exemption for every household member, including children, as well as the child tax credit and earned income tax credit, it is especially hard on families with children,” said OK Policy Director David Blatt.
The largest tax increase among married couples with two children would be for households making $25,000, according to the analysis. These families would see a tax increase of $647. Two-child families would not receive a tax cut unless their income was at least $117,000.
Another group disproportionately affected is low-income seniors, because they would lose the sales tax relief credit and the personal exemption, which is doubled for seniors with incomes below $25,000. Almost all senior couples making less than $50,000 would have their taxes increased. Among all households, the top 1 percent (those making $357,400 or more) would receive by far the largest benefit, with an average tax break of $2,833. The bottom 60 percent would see an average tax increase of $107.
“Hiking taxes on those already struggling to get by is exactly the wrong approach to boosting Oklahoma’s prosperity,” Blatt said. “It would damage our economy and increase the demand for state services as more Oklahomans are pushed into poverty.”
The sales tax relief credit was claimed on almost one-third (32.3 percent) of all of the tax returns filed in 2009, and it provided a $40 benefit each to more than 1 million Oklahomans. The Oklahoma earned income tax credit was claimed on 307,253 returns in 2009 for an average benefit of about $104. The child care tax credit/child tax credit was claimed on 362,470 returns for an average benefit of about $80. The personal exemption benefits everyone who files an Oklahoma state income tax return; it reduces tax liability for a family of four by more than $200.
A fact sheet with the full analysis is available at https://okpolicy.org/tax-shift.
