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For some Oklahomans, benefit of tax cut plan is difficult to find

by The Oklahoman Editorial Board Published: May 22, 2012

A line in “True Grit” (1969 version) has a Fort Smith boardinghouse lodger joking about the entree on offer for the evening meal.

“Watch out for the chicken and dumplings,” he says. “They'll hurt your eyes.”


“They'll hurt your eyes looking for the chicken.”

Some Oklahomans looking for the benefit of an income tax cut proposal might need more than glasses. Perhaps a microscope.

It took some grit for Gov. Mary Fallin to get her ambitious tax reform proposal to this stage. She got nowhere near all she wanted — including a gradual phaseout of the personal income tax — but she'll get more than a sop of gravy if the plan clears the Legislature.

Finding the benefit is another matter.

The top rate will drop from 5.25 percent to 4.8 percent. That's delicious. Tax rate categories will drop from seven to three. That's toothsome as well. An economic growth trigger would induce another drop, to 4.5 percent. That could potentially leave a bad taste.

Where the thing gets tricky is in the offsets. Most taxpayers will pay the top rate (they already do) and so will be taxed at the new lower rate. But many will also lose the personal exemption and other benefits. As an agreement between Fallin and Republican legislative leaders was announced Thursday evening, one key lawmaker said he doesn't actually know how many people will get a tax cut and how many will get an increase.

That's something taxpayers need to know and they need to know it now. If loss of the personal exemption ($2,000 per couple) costs more than the tax cut saves, this isn't really a tax cut. Indeed, preliminary figures show that some taxpayers will pay more.

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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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