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Oklahoma's income tax cut proposals have Republicans battling themselves

Republicans in the state Senate favor a personal income tax cut to take effect in 2015, while House Republicans and Oklahoma's GOP governor prefer a cut to take place next year.
BY MICHAEL MCNUTT Published: April 8, 2013

Republicans who clawed for years to get control of Oklahoma's statehouse are fighting among themselves over cutting the state's top personal income tax rate.

A key part of the battle is over whether a cut should take place next year or should be postponed for another year.

House Minority Leader Scott Inman, D-Del City, recalling last year's impasse over cutting the personal income tax, said the disagreement on when a cut to the top personal income tax rate of 5.25 percent would take effect could spell doom for getting tax-cutting legislation passed this year.

“The state Senate Republicans, while they were supportive of a tax cut, did not want to cut income taxes last year and if you look at their bill this year … they don't want to cut income taxes this year either,” Inman said. “With just a month and a half left and to be this far apart in how they cut it … that is significant. It really is in terms of whether they can get the sides to agree.

“Right now it doesn't look good for a tax cut,” he said.

Sen. Tom Ivester, D-Sayre, said, “We are seeing political infighting among Republicans in the Senate, Republicans in the House and the governor's office affect our ability to make good public policy. We're being forced to debate political talking points — whether a tax cut should be implemented before or after an important election year in 2014, whether the rate should be at or just below 5 percent … Drama about what is politically expedient is overtaking our ability to do what is best for Oklahoma.”

Republican legislative leaders, however, said they are determined to deliver an income-tax cut before the session is scheduled to end in late May.

“We have open dialogue with the governor and the speaker,” said Senate President Pro Tem Brian Bingman, R-Sapulpa. “We've still got two months in session.”

A mantra for decades

Cutting taxes has been a mantra the past 20 years for Republicans while their numbers gradually increased in the House of Representatives and the Senate. The GOP gained control of the House after the 2004 elections and the majority in the Senate after the 2008 elections. When Gov. Mary Fallin took office in January 2011, Republicans for the first time in Oklahoma history had a GOP governor while they controlled the House and Senate.

House Speaker T.W. Shannon and Fallin backed legislation this year calling for a cut in the personal income tax to take effect Jan. 1. House Bill 2032, authored by Shannon, R-Lawton, originally called for reducing the top rate to 5 percent; it would have been paid out of existing revenue.

A Senate committee last week scrapped their proposal and replaced it with language that delayed the cut from taking effect until Jan. 1, 2015. It also would reduce the top personal income tax rate from 5.25 percent to 4.95 percent, and end the practice of five popular economic tax credits from being sold to others who need to reduce their income tax liability to the state.

Democratic lawmakers oppose a cut of any kind, saying legislators need to first adequately fund key services such as education, roads, public safety and human services before cutting personal income taxes, the top revenue source for the state's coffers. Personal income taxes bring in about one-third of the state's legislatively appropriated budget. For this fiscal year, personal income taxes are estimated to bring in $2.1 billion of the $6.8 billion budget.

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