Caution urged in forecasting Oklahoma tax revenue trends

by The Oklahoman Editorial Board Published: May 16, 2013
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WEATHER trends are often cited to support political positions, such as those either pushing a climate change agenda or opposing that agenda. It's dangerous, though, to put too much stock in short-term temperature or precipitation trends when formulating a policy stance.

The same is true of government revenue trends. We thus urge caution in jumping to conclusions about a trend toward higher state income tax collections at a time when income tax cuts are supposedly depressing revenues. Those who pushed the cuts are enthused by recent trends. They've said for years that total revenues increase following tax cuts, when the opposite should be true.

State Secretary of Finance and Revenue Preston Doerflinger said Tuesday that general revenue fund receipts were up by nearly $90 million — 14.7 percent — last month when compared with April 2012. Income tax collections account for most of the gain. This wasn't just a one-month trend: Net income tax collections for the first 10 months of fiscal 2013 were 13.5 percent above projections.

Still, total year-to-date general fund receipts were only 1 percent higher than the year-earlier period, and the April income tax figures may be an aberration. The year-to-date income tax receipts, however, aren't an aberration.

Doerflinger and Gov. Mary Fallin hailed the latest figures as another sign of the resilience of Oklahoma's economy despite depressed natural gas prices and sequester-related cuts in federal spending. Fallin added that the results provide further proof of the wisdom of pro-growth policies that include income tax cuts.

Solid growth in personal and corporate income tax collections in April boosted a state government suffering from relatively weak sales tax, gross production tax and motor vehicle tax collections last month.

The upshot of all this is that tax cutters have fodder for support of their position, based on what happened in April and even on what's happened in fiscal 2013. Their political opponents will cite the precipitous decline in gross production tax receipts as yet another reason income taxes shouldn't be cut — adding to a long list of reasons.

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by The Oklahoman Editorial Board
The Oklahoman Editorial Board consists of Gary Pierson, President and CEO of The Oklahoma Publishing Company; Christopher P. Reen, president and publisher of The Oklahoman; Kelly Dyer Fry, editor and vice president of news; Christy Gaylord...
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