WASHINGTON — Income tax hikes set to be triggered in January would force Oklahoma consumers to pull back on spending and stunt the growth of the state's economy, according to a White House report released Thursday.
Should federal income tax rates return to the levels of a decade ago, the average Oklahoma family of four with an annual income of $63,100 would see its tax bill rise by $2,200 next year, the report says. In all, 1.3 million Oklahoma families would have higher federal income tax bills.
Oklahoma consumers would spend an estimated $2.2 billion less next year, and the state's gross domestic product would decline by 1.5 percent, the White House says.
Congressional Republicans and the White House are in a standoff over the expiring tax cuts. President Barack Obama wants to retain the current rates for couples with income under $250,000, while Republicans want to preserve the rates for all taxpayers, including those in the top brackets.
The White House report says 99 percent of Oklahoma families making less than $250,000 would see no income tax increase under the president's plan.
Retaining the tax cuts will require action by Congress. If lawmakers fail to take action to preserve the lower rates, the higher ones will go into effect. That would be on top of higher payroll taxes since the temporary cut in the tax that funds Social Security is also set to expire in January.
Obama this week has been highlighting the potential impact of higher taxes on the middle class, while Republicans have countered that higher taxes on the upper brackets would hurt many small businesses that file tax returns as individuals.
Rep. Tom Cole, R-Moore, made waves within the Republican Party this week by suggesting Republicans approve the tax cuts for the 98 percent of taxpayers in the lower brackets and fight later about the rates for those in the upper brackets.
Cole said he didn't want middle-class families held hostage in the standoff.
Cole's suggestion was roundly dismissed by Republican leaders. House Speaker John Boehner, R-Ohio, has said Republicans are willing to accept more revenue as part of a deficit-reduction deal, but only through closing tax loopholes.
But White House spokesman Jay Carney said Thursday that Obama would not sign legislation extending tax cuts for the nation's top earners.