Much of what elected officials do at the Oklahoma Capitol has an impact on the economy, affecting whether Oklahoma is the best place to live and to do business. Our productive action can make Oklahoma the place to relocate your business and jobs, especially if you live in a state with overreaching regulations and high taxes.
Expanding opportunity for Oklahoma families and businesses is why I authored House Bill 1716, which would eliminate the Oklahoma Business Franchise Tax. Many corporations and businesses in Oklahoma experience double taxation because of the franchise tax. State law requires many corporations and businesses to pay both a corporate income tax of 6 percent and a franchise tax of 1.25 percent on every $1,000 of capital or investment in the state.
In a global economy where capital and economic activity can move freely to the best environments, our double taxation of the productivity and success of businesses and their employees is an obstacle to growth. Many states are working to remove burdensome taxes and regulations, especially states in our region. If Oklahoma wants to remain competitive with the favorable business climates of other states, it makes no sense and hurts Oklahoma's future to continue our burdensome franchise tax.
This tax also creates excess administrative costs for businesses because of the efforts required to calculate the tax and ensure proper compliance. Oklahoma can easily eliminate our franchise tax, as it equals less than 0.4 percent of state revenues.
Oklahomans deserve to keep more of their hard-earned income. A number of states, including Kansas, are aggressively seeking to reduce and eliminate one of the most damaging taxes, the personal income tax. Oklahoma is sandwiched between two states, Kansas and Texas, that have lower personal income tax rates than Oklahoma. In order to treat the work of Oklahomans fairly and to remain competitive, we must continue to lower our personal income tax.
Gov. Mary Fallin set this as a goal in her State of the State address, calling for a reduction in our top personal income tax rate from 5.25 to 5 percent. This modest and necessary reduction can be accomplished easily due to the continued growth of our economy and continued growth of state government revenues.
This legislative session can be historic if we, as policymakers, keep our focus on expanding opportunity. Eliminating the franchise tax and continuing to lower the income tax will accomplish this goal.
Osborn, R-Mustang, represents District 47 in the Oklahoma House.