Tulsa World Editorial: Have Oklahoma’s fractional tax cuts been worth the price?

By Tulsa World’s Editorial Writers

Wednesday is the deadline to file 2014 federal and state income taxes or to ask for an extension. If you haven’t finished your taxes, you better get busy.

While the income tax is topical, let’s think about the impact of recent Oklahoma tax policy choices.

Beginning when Frank Keating was governor, continuing through Brad Henry’s administration and through the governorship of Mary Fallin — with Democrats and Republicans in control of the Legislature — Oklahoma has been undercutting its tax base by nickles and dimes.

In 1998, the Legislature approved reducing the state’s top income tax rate from 7 percent to 6.75 percent, the first of a series of fractional cuts in the top rate that taxpayers rarely would notice, but which left the state budget wanting. Unless the Legislature stops it, the rate goes to 5 percent in 2016.

Under the promise that cutting Oklahoma income taxes would cause a bonanza of economic growth, Oklahoma has made it impossible to fund adequately those things that will, in fact, lead to economic growth, education and infrastructure.

The Oklahoma Policy Institute says that Oklahoma has cut taxes by more than $1 billion in the past decade, and tax collections are at a historically low share of the state economy.

There has been prosperity for the state at times in the process. And serious economic downturns at other times. Our conclusion: The ability of fractional state income tax cuts to pay for themselves by spurring the economy is negligible. Oklahoma’s economy is much more responsive to forces beyond the control of the Legislature — petroleum prices and national economic growth — than it is to quarter-point tax cuts.

The job creators we talk to tell us that they’d much rather see Oklahoma investing its money in an educated workforce than an income tax cut.

Nobody enjoys paying taxes. They are a necessary annoyance, the price of living in civilized society. We hope Oklahomans enjoy the $31 they’ll realize on average as a result of the 2016 tax cut, but we frankly don’t think it will be worth its real cost



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