TAX credits have become the Mark Twain of Oklahoma politics: Reports of their demise have been greatly exaggerated.
Officials have now acknowledged what's been obvious for weeks: Lawmakers lack the political will to eliminate most credits.
The decision also means lawmakers won't approve a major tax cut. Gov. Mary Fallin wanted to slash the top income tax rate to 3.5 percent and eliminate income taxes entirely for low-income families.
However, her plan offset the rate reduction with elimination of many tax breaks, making it similar to President Ronald Reagan's 1986 reform. Reagan's plan cut the federal income tax to the lowest level since the 1920s by closing numerous “loopholes.”
State Rep. David Dank, R-Oklahoma City, helped pave the way for Fallin through his work as chairman of a special committee reviewing tax credits. Dank's committee met for months and identified legitimate problems with several credits, most notably the failure to generate long-term job creation.
Transferable tax credits, which can be sold by recipients to other taxpayers at a reduced rate, were among the most controversial. Although designed to support specific economic activity, transferable credits ultimately benefit unrelated individuals and entities, including insurance companies and attorneys.
To critics, transferable tax credits make Oklahoma taxpayers an indirect business lender with no expectation of direct repayment — just a promise of future job creation that often fails to materialize.
While Fallin's plan seemed a slam dunk early on, political reality at the Capitol soon derailed it. Tax breaks benefitting average citizens, including retirees, were quickly taken off the table. And although citizens are largely indifferent to many corporate tax credits, those credits have the devout protection of business interests with clout and potential campaign contributions at their disposal.
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