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Oklahoma treasurer calls income tax reduction measure 'clear as mud'

Oklahoma taxpayers could get a small cut in their state income taxes beginning in 2016, but it’s based on a complicated revenue-based “trigger” built in to the measure. So complicated that even state Treasurer Ken Miller, who holds a doctorate in economics, said it’s about as “clear as mud.”
by Rick Green Published: July 28, 2014
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photo - Oklahoma state Treasurer Ken Miller, seen in this AP file photo, gestures during a news conference in Oklahoma City, Tuesday, April 3. Miller, who holds a doctorate in economics, has expressed confusion over the state income tax reduction passed in the last legislative session. (AP Photo/Sue Ogrocki)
Oklahoma state Treasurer Ken Miller, seen in this AP file photo, gestures during a news conference in Oklahoma City, Tuesday, April 3. Miller, who holds a doctorate in economics, has expressed confusion over the state income tax reduction passed in the last legislative session. (AP Photo/Sue Ogrocki)

Almost two months after Oklahoma lawmakers ended their legislative session, the status of a state income tax reduction measure that is often pointed to as one of their top accomplishments is fraught with uncertainty.

Oklahoma taxpayers could get a small cut in their state income taxes beginning in 2016, but nobody can say whether that’s even likely to happen.

It’s all based on a complicated revenue-based “trigger” built in to the measure.

So complicated, in fact, that even state Treasurer Ken Miller, who holds a doctorate in economics, said it’s about as “clear as mud.”

“I just don’t understand the logic of a trigger,” he said Thursday. “There’s no economic reason to pass a measure today predicated on a future event, when one can simply wait for that event to occur and then preserve the flexibility. It’s difficult to explain the mechanics of the trigger and it’s certainly difficult to communicate to the taxpayers what their taxes are going to be.”

Of course, there could be some political logic in passing an income tax cut that doesn’t take effect until sometime in the future, and then only if certain qualifiers are met.

“I would say the triggers are probably better for politics than economics,” Miller said.

According to Tim Allen, deputy treasurer for communications and program administration, here’s how it works:

The Oklahoma Board of Equalization will meet this December to estimate state revenue for the 2016 fiscal year, which runs from July 1, 2015, to June 30, 2016.

If that revenue estimate is higher than the estimate for the 2014 fiscal year (certified by the board in February 2013), the top state income tax rate would drop to 5 percent from 5.25 percent in 2016.

As a point of reference, state officials who made the 2014 revenue estimate guessed too high.

Actual revenue came in 4.8 percent lower than the estimate. Corporate income tax collections were lower than expected. Actual revenue barely grew compared with the previous year.

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by Rick Green
Capitol Bureau Chief
Rick Green is the Capitol Bureau Chief of The Oklahoman. A graduate of Humboldt State University in Arcata, Calif., he worked as news editor for The Associated Press in Oklahoma City before joining The Oklahoman.
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