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Personal exemption a target in state Senate income tax bill

by The Oklahoman Editorial Board Published: February 26, 2013
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The argument for increasing the personal exemption with family size is that parents of young children face greater obligations than those without dependents. Yet SB 585 could financially hit some of those families. What's the economic logic behind this? The same question applies to SB 585's limit on the child tax credit, which it allows for some families but not others.

Another provision of the bill limits itemized deductions to 80 percent of value for those earning more than $100,000 (or $200,000 for couples). Critics note this means Senate Republicans are effectively defining “rich” at a lower level than even President Barack Obama, who called for raising taxes on families earning more than $250,000 during the fiscal cliff negotiations.

While Fallin's plan would ultimately save Oklahomans about $125 million per calendar year, SB 585 would save citizens just $108 million per year, even though the reduction to the top rate is twice what Fallin has proposed. This would indicate SB 585 contains roughly $140 million in offsets. While Fallin's plan would cut taxes for 63 percent of Oklahomans with no change for the remainder, SB 585 would increase taxes for 10 percent and cut them for 59 percent.

Perhaps Senate Republicans can give a reasoned economic defense of their plan. If so, they should. As it stands now, SB 585 appears to often increase tax code complexity in arbitrary ways that leave similar families facing different tax outcomes.

by The Oklahoman Editorial Board
The Oklahoman Editorial Board consists of Gary Pierson, President and CEO of The Oklahoma Publishing Company; Christopher P. Reen, president and publisher of The Oklahoman; Kelly Dyer Fry, editor and vice president of news; Christy Gaylord...
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