Tax ruling expands Oklahoma’s budget options (News OK)

By Dale Denwalt

The Oklahoma Supreme Court ruling that upheld the automobile sales tax could give lawmakers an easier way to raise revenue.

The court defined the difference between creating a new tax, which requires a supermajority vote, and modifying a tax exemption, which only needs a simple majority to pass. Vehicle sales have historically been exempt from sales tax, but the Legislature removed part of the exemption in May.

Now that lawmakers know that action is constitutional, they may attempt similar legislation in a special session or during next year’s regular session to help balance the budget.

“There’s a whole host of these kinds of things that are available, built into our current tax structure,” said James Davenport, political science professor at Rose State College.

All the state’s tax exemptions and other incentives total billions of dollars.

The Oklahoma Policy Institute think tank said legislators should muster a supermajority to pass a cigarette tax, reverse income tax cuts and increase the rate paid on oil and gas production.

“Lawmakers should (also) take a serious look at ending tax breaks that do nothing for average Oklahomans, like the more than $100 million tax break for capital gains of wealthy stockholders and commercial real estate owners,” Policy Analyst Gene Perry said. “Lawmakers have good options to not only prevent life-threatening cuts to health care, but also to finally meet widely agreed-on needs like a pay raise for teachers and other public workers.”

If the Legislature decides to target more exemptions, however, there could be pushback.

“These exemptions exist because somebody lobbied the state Legislature for them, so every exemption they’re going to try to repeal is going to have some interest group, some group of voters who are adamant about maintaining that exemption,” he said.

The ruling issued Thursday also cast a shadow on State Question 640, the 1992 constitutional amendment that forced lawmakers to have a three-fourths majority to pass so-called revenue bills.

The court’s 5-4 majority drew a “bright line” between creating a tax and changing an exemption.

“Measures whose primary purpose is to raise revenue for the support of state government and which levy a tax in the strict sense are ‘revenue bills’; measures merely eliminating special exemptions to already levied taxes are not,” Justice Patrick Wyrick wrote.

The four justices who rejected that definition said the majority’s argument ignores the intent and will of people who voted for the constitutional amendment.

“The majority’s interpretation strips (State Question) 640 from any real impact as the Legislature can now grant and remove any and all exemptions, as they please with only 51 percent of the vote, making the need for revenue bills as the majority defines them essentially nil in light of the ‘billions worth’ of exemptions that the majority states are currently in our tax code,” wrote Justice Joseph Watt.

A separate writing from Chief Justice Doug Combs said the automobile sales tax was created to raise revenue, and should have been held unconstitutional.

“The purpose and intent of State Question 640 is now eviscerated, and the citizens of Oklahoma who enjoy a benefit of a tax exemption will be subject to the legislative act of a simple majority as a method of raising revenue,” Combs wrote.


Margaret (Maggie) den Harder obtained a Bachelor of Arts in Christian Theology from Seattle Pacific University and a Master of Public Administration from the University of Oklahoma. Originally from the Pacific Northwest area of Washington state, Maggie has called Tulsa home for the past 8 years. Since living in Tulsa, Maggie has worked in the legal field, higher education administration, and the nonprofit sector as well as actively volunteering in the community. Maggie also recently spent time at the City of Tulsa as a consultant and wrote the content for Resilient Tulsa, an action-oriented strategy designed to better equity in Tulsa. Through her work, community involvement, and personal experiences, Maggie is interested in the intersection of the law and mental health and addiction treatment issues, preventative and diversion programs, and maternal mental health, particularly post-partum depression and post-partum psychosis. While working at Oklahoma Policy Institute as a research intern, Maggie further developed an interest in family dynamics and stability, economic security-related stress, and intergenerational trauma.

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