Now is the time to schedule more tax cuts for Oklahomans. In less than a year, the state will implement the final tax cut that was passed in 2006, reducing to 5.25 percent the rate most Oklahomans pay. With Republicans in charge for the first time and Oklahoma's tax rate higher than 21 states, we can't stop now. My legislation, Senate Bill 70, would continue the necessary process of lowering our onerous income tax rate, at a reasonable but relentless pace.
I believe there is an urgency to schedule more tax cuts to send two important messages. First, Republicans must send the message to Oklahoma taxpayers that we remain serious about lowering the income tax. Second, Oklahoma must send the message to the nation that we are open for business. In combination with a pro-business package of workers' compensation, tort and education reform, scheduling more income tax cuts now will make a powerful statement.
Some will express caution, particularly when we are dealing with a current revenue shortfall. However, my proposal is incremental and doesn't begin until 2013. It would lower the income tax rate 0.1 percent every year for the next decade, starting Jan. 1, 2013. In no single year would the impact to state revenues be significant, but in the end, we would have lowered the rate dramatically to 4.25 percent.
In the first full year of these proposed cuts, state revenues will take a manageable $50 million hit (consider that this year's shortfall is north of $500 million). The reduction in future years is similar. I believe Oklahoma can handle this for at least three reasons. First, we can manage with a little less. Second, because the cuts are so incremental, they will probably just limit the growth in government. And third, lost state revenues are not launched on a rocket to Mars — they are put in the hands of Oklahomans. And with a more competitive tax rate of 4.25 percent, there will be more taxpayers. For this reason alone, I believe that in the long term, Oklahoma won't suffer a revenue loss at all.