Q&A with Robert Dauffenbach
State’s taxes are low compared
to others in region, study shows
Q: Recent data from the Tax Foundation examines taxes in Oklahoma and surrounding states. Can you provide us with some of those findings?
A: Oklahoma is commonly seen as having higher per person tax collections than Texas. However, per capita, the Tax Foundation study found that Oklahomans paid an average of $2,143 to their state and local governments in comparison to $2,109 in Texas, a $34 difference. For fiscal year 2009 and 2010, state and local taxes were $43 and $69 higher in Texas. Oklahoma appears to have “closed the gap” with Texas.
Q: The Tax Foundation study attempts to account for tax paid by citizens of one state to other states. What sort of tax payments does that highlight, and what do we learn from that?
A: The Tax Foundation study recognizes that taxes on businesses are indirectly paid by consumers. Alaska’s high taxes on oil and gas production are offered as an example. Alaska produces but does not consume much oil and gas, but the tax shows up in the price. Therefore, Alaska exports most of such taxes to consumers in other states. The Tax Foundation attempts to allocate all such indirect business taxes and, thus, estimates taxes paid by citizens of one state to state and local government in other states.
Q: What are the major differences between state and local tax collections in Oklahoma and Texas?
A: Texas relies heavily on the property tax and is estimated to collect, per capita, about two and one-half times the level of property taxes as does Oklahoma. They don’t have an income tax. However, because the value of our houses positively correlates with our incomes, the property tax operates like a quasi-income tax. The difference is that in a recession when incomes drop, so do receipts from the individual income tax. Property taxes are still owed, and, in consequence, are good for government in steadiness of revenues, but less favorable to the taxpayer.