Temporary resolution of the fiscal cliff debate in Washington resulted in higher payroll taxes for most Oklahomans. Coupled with higher health insurance costs and additional taxes associated with Obamacare, these looming drains on our economy make it even more essential to reduce state income tax rates. But that's unlikely to happen until we address the tax credit scandal that siphons off hundreds of millions of dollars from our state budget each year.
A tax system should have two features. It should adequately fund essential state services and it should be fair to all. Because of substantial tax credits granted to vocal and often narrow special interests, Oklahoma's system fails on the second criteria.
We have a long history of granting tax credits that range from the questionable to the outrageous. Some may recall the ill-fated Rocketplane boondoggle that handed out $18 million in tax credits for a venture that literally never left the ground. Great Plains Airlines got $27 million and never flew.
A legitimate tax credit should create or sustain real and lasting jobs. It should return more than it costs to the taxpayers in the form of increased income, sales and property taxes from those jobs. It should boost our economy in significant ways. At bottom, a legitimate tax credit is an investment in ourselves.
Too many of our existing tax credits fail that test. We're subsidizing wind power developers who can also take advantage of lucrative federal incentives, and who can then sell the power they generate out of state. We're underwriting historic preservation projects that create few lasting jobs and enrich even fewer. You can get a generous home office tax credit by opening a business that's not a home office at all — and you can keep getting that tax credit forever.