Personal exemption a target in state Senate income tax bill

The state Senate has another approach. Senate Bill 585, by Sen. Mike Mazzei, R-Tulsa, would lower the rate to 4.75 percent, but not until 2015. While Fallin's plan is funded with existing growth revenue, the Senate bill repeals tax breaks in exchange for a lower rate.

There's definitely a pro-growth argument for repealing special breaks that reward narrow constituencies while lowering income tax rates for all. Tax breaks giving favored preference to specific business activities can cause money to be used in less-productive ways than would otherwise occur. All tax incentives should be carefully scrutinized.

However, some breaks targeted in SB 585 are available to all and appear unlikely to cause economic distortions. Most notably, the Senate bill goes after the personal exemption. The economic justification for that change is hard to fathom.

Under SB 585, a couple earning less than $70,000 would still get a personal exemption of $1,000 per exemption, but others earning more would not. This could result in a tax increase for a couple whose income increases from $69,999 to $70,001.

But it's more complicated than that. Those earning more than $70,000 keep the personal exemption if they have four or more exemptions. If they have three or fewer, they lose it. So a couple with one child and an income just above $70,000 doesn't get the personal exemption, but a similar family with greater income and two children would.

A single filer with income above $35,000 and fewer than four exemptions would also lose the personal exemption. This means a single mother with two children and modest income could lose the $3,000 write-off now granted through the personal exemption.