Task Force proposes tax hike on poor and middle class to benefit the wealthiest

This afternoon, the Senate Task Force on Comprehensive Tax Reform released its final report. The most significant recommendation is to make further cuts to the top rate and replace that revenue by ending numerous tax credits. Almost two-thirds of the tax benefits targeted for elimination do not go to special interests or favored industries, but to hundreds of thousands of taxpayers below a certain income level in order to offset regressive sales and property taxes. They would also end the personal exemption, which reduces the tax liability for every household in Oklahoma.

This proposal is a bad deal for hardworking Oklahomans. Doing away with broad-based tax benefits like the personal exemption, earned income tax credit, and sales tax relief credit in exchange for a cut in the top income tax rate would actually increase taxes for a majority of Oklahomans. This would hit hardest the poor and middle class families who are struggling most to make ends meet in a tough economy.

The Task Force recommendations to cut the income tax run counter to the testimony provided by a united chorus of economists and business leaders who strongly rejected the idea that this is the right path to ensure Oklahoma’s prosperity. With revenues already at historic lows and agencies reeling from three successive years of budget cuts, further tax cuts will harm our ability to invest in our workforce, repair our infrastructure, and strengthen our health care system, as well as undermine our efforts to address long-term budget challenges such as our unfunded pension liabilities and understaffed child welfare system.

The recommendations do include several promising ideas, including adopting combined corporate reporting, eliminating the income tax deduction for state taxes, and more actively pursuing taxes owed on remote sales, which should be pursued by the Legislature.

However, we are deeply concerned by the secretive process that led to the Task Force’s final report and recommendations. Although the Task Force held hearings, its report and recommendations were never presented, discussed, or voted on in a public meeting. Several proposals in the report, including eliminating the personal exemption and broad-based tax credits, were never mentioned at the task force’s public meetings and appear to have emerged from a series of private, closed-door meetings of Task Force members. This is not the way that policy recommendations that could have a dramatic effect on all Oklahomans should be developed.