Oklahoma House approves income tax-cutting measures

March 12, 2013


By Michael McNutt

An income tax-cutting proposal backed by Gov. Mary Fallin passed easily Tuesday night in the House of Representatives, despite concerns from House Democrats that the state can't afford to reduce revenue.

House Bill 2032 passed mostly along party lines, 65-30. It now goes to the Senate.

HB 2032 would reduce the state's highest personal income tax rate from 5.25 percent to 5 percent.

The Republican governor recommended the proposal last month to the GOP-controlled Legislature after legislation seeking bigger cuts failed to advance last year.

HB 2032 is one of three income tax-cutting measures being considered this year. The Senate earlier this week passed Senate Bill 585, which would lower the top personal income tax rate to 4.75 percent; it would eliminate several tax preferences by 2015, including those for equipment for recycling or waste reduction and for child-care businesses.

The House late Tuesday had yet to consider HB 1598, which would drop the top personal income tax rate from 5.25 percent to 4.99 percent.

Personal income taxes bring in about one-third of the state's legislatively appropriated budget. For this fiscal year, personal income taxes are estimated to bring in $2.1 billion of the $6.8 billion budget.

HB 2032 calls for the income tax cut to be paid for out of available revenue. It is not dependent on reducing or eliminating any tax credits or exemptions or deductions as most of last year's proposals did.

It's expected to cost the state about $40 million in revenue for the 2014 fiscal year, which starts July 1, and about $120 million when it is fully implemented in the 2015 fiscal year.

“It is important that Oklahomans hold on to more of their hard-earned tax money,” said House Speaker T.W. Shannon, R-Lawton, the bill's author. “People with more money in their pockets either save, invest or spend those dollars. This is good for the economy and previous income tax cuts have sparked record revenues and prosperous growth here in Oklahoma.”

House Minority Leader Scott Inman, D-Del City, said the state has too many pressing needs to afford an income-tax cut. He said about 40 percent of Oklahoma taxpayers would see no tax savings and the average savings would be about $76 a year.

He said Oklahomans would much prefer money going to improve public schools, roads and bridges and salaries of Oklahoma Highway Patrol troopers and correctional officers.

“If you think giving families back $7 a month, $77 a year, somehow is going to change their buying habits to make this economic engine run, you're fooling yourself,” Inman said.

“The taxpayers would much rather you educate children, pave roads and bridges, take care of health care and make sure for crying out loud you keep our people safe.”