Gov. Mary Fallin and House speaker T.W. Shannon backed off Thursday from insisting that any cut in Oklahoma's personal income tax rate take effect in January.
“I want a tax-cut bill on my desk this year,” Fallin said. “Now we can negotiate on when it would be effective, how much of a tax cut it is, what it will include. Those things are all being discussed right now.”
Fallin made the comments as talks accelerate on reducing the top personal income tax rate of 5.25 percent. The GOP governor met Thursday with Shannon and plans to meet Friday with Senate President Brian Bingman, R-Sapulpa. The session is scheduled to end in late May; all three have said they don't want a repeat of last year when they couldn't agree on a reduction to the personal income tax.
“I am hopeful and I think it's very important that we get a tax-cut bill to my desk this year,” Fallin said.
Shannon, R-Lawton, said he would agree to a reduction being postponed until Jan. 1, 2015, if the cut was deep enough. He hinted at a final rate of 4.75 percent. A source close to the negotiations said that figure could be achieved with a quarter percent cut for the 2015 tax year and a quarter percent cut in 2016.
“I fundamentally believe that if we cut taxes that it will grow revenue so why we would want to delay it is a challenge I have,” he said. “If we do delay it, I wouldn't close the door on that but it will need to be a deeper tax cut. … If we don't do it this year, then I think it needs to be a deeper cut.”
The Senate last week replaced Fallin's income tax-cut proposal that was contained in Shannon's bill. Fallin and Shannon proposed a simple reduction to 5 percent, effective Jan. 1, a plan that Fallin still referred to Thursday as a reasonable tax cut the state could afford.
About the bill
The new version of House Bill 2032 calls for reducing the top personal income tax rate to 4.95 percent, taking effect in 2015. It also ends the practice of five popular economic tax credits from being sold to others who need to reduce their income tax liability to the state.
Asked how close the sides were on agreeing to the size of a cut, Shannon said, “I think we're a tenth of a point away from really being close to an agreement.”