Oklahoma's private sector is the goose laying golden eggs to fund state government. Yet some education officials keep demanding we butcher that bird right now! Their complaints about a ballot measure approved last fall regarding taxation of intangible property provide the latest example of such shortsightedness.
State Question 766 exempted intangible personal property from ad valorem taxation. Included was the repeal of some existing taxation of intangible assets with an estimated revenue impact of around $50 million. Now some officials think the impact may be as much as $100 million.
That's not loose change from your sofa, but it's also a shift of $100 million in an education system getting billions from federal, state and local taxes. Furthermore, standard growth in annual property tax collections will ultimately offset that impact. K-12 education funding has increased as much as $56 million in a single year through growth in ad valorem collections.
Any serious review of SQ 766 must note the fact that an Oklahoma Supreme Court ruling left countless Oklahoma businesses facing new taxation of intangible assets never before assessed — things like advertising campaigns, trademarks and even customers' good will. Last fall, it was estimated Oklahoma businesses could face up to $60 million in resulting new taxes. And who's to say that estimate wasn't also on the low side?
The impact of millions in new taxes and associated regulatory uncertainty would have hindered Oklahoma job creation and could have driven some companies out of state. This in turn would have meant millions less in tax collections to fund schools.
SQ 766 might not have been perfect, but it remains far preferable to the high-tax alternative. In overwhelmingly voting for SQ 766's passage, Oklahoma citizens also voted in favor of education — by supporting private-sector economic growth that provides the taxes making public schools possible in the first place.