OKPOLICY.ORG
During today’s State of the State address, the governor is very likely going to renew his call for cutting taxes in Oklahoma.
As he does so, OK Policy would like to remind our fellow Oklahomans of some key points:
- Across-the-board tax cuts mostly benefit the richest 1%. The governor’s latest proposal to cut the income tax by half a percent would give nearly $6,000 every year to the wealthiest Oklahomans, while the lowest earners would get about $15 — not even enough to fill a gas tank. That’s not meaningful relief for working families. (Also, the projected cost is about three times more expensive than what his office initially suggested.) | FACT CHECK: How would the governor’s proposal to cut, eliminate personal income tax affect Oklahoma?
- State revenue is already projected to decline. The Board of Equalization’s latest budget forecast for the next fiscal year (starting July 1, 2025) projects a drop in revenue compared to last year. Meanwhile, a 2024 state budget stress test showed Oklahoma is financially unprepared for anything beyond a mild recession. And last week’s chaos around the federal grants freeze clearly showed there are major questions about the availability of the federal dollars that provide more than 40% of funding for state programs and services.
- The “Path to Zero” is a dangerous road. The governor’s ultimate plan is to eliminate income taxes for both individuals and corporations — a move that would slash nearly 40% of the state’s appropriated budget. That means massive cuts to education, roads, public safety, and other essential services. At a time when Oklahoma already ranks in the bottom 10 on many quality-of-life measures, can we really afford to cut even more?
- If income taxes disappear, where does the money come from? Without income tax revenue, lawmakers will have to raise money elsewhere—most likely through higher sales taxes, increased taxes on everyday goods and services, or even a new state property tax. These changes would hit working families, seniors, and small businesses the hardest.
- “More taxpayers” won’t solve the problem. The governor argues that economic growth will make up for lost tax revenue, but that doesn’t hold up. As Oklahoma’s population grows, so does the demand for public services. If tax cuts shrink the budget, there will be fewer resources to go around, making it even harder to meet the needs of a growing state.
- Tax cuts are permanent. Economic conditions change. Once lawmakers cut tax rates, they’re nearly impossible to reverse due to Oklahoma’s supermajority requirement for raising new revenue. Over the past two decades, repeated tax cuts have drained more than $2 billion annually from the state budget, making it harder to fund public education, health care, and infrastructure. When adjusted for inflation and population growth, today’s state budget is nearly 9% smaller than it was 20 years ago. [FY 2025 Budget Highlights]
- There’s a smarter way to help Oklahomans: modernize existing tax credits. Unlike permanent tax cuts, tax credits already on the books — such as the Sales Tax Relief Credit, Child Tax Credit, and Earned Income Tax Credit — can be adjusted over time based on economic conditions. This gives lawmakers the flexibility to provide relief when families need it most, without creating long-term budget shortfalls.
From Oklahoma Policy Institute Executive Director Shiloh Kantz:
“Oklahoma doesn’t need tax cuts that overwhelmingly favor the wealthy and put education, health care, and other essential services at risk. Instead, lawmakers should focus on practical, fiscally responsible solutions — like modernizing tax credits — that actually help working families and keep our state financially stable.”
