Separate gatherings present polar views on proposals to cut Oklahoma's personal income tax

Proponents of cutting Oklahoma's personal income tax maintain it will stimulate economic growth and attract businesses while opponents say that cutting the personal income tax poses risks.
BY MICHAEL MCNUTT mmcnutt@opubco.com Published: April 6, 2012
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Representatives from two neighboring states seeking to lower their personal income tax rates encouraged Oklahoma lawmakers Thursday to pass a tax cut this year while critics down the street called the tax-cutting proposals frightening.

“It can't work,” said Alexander Holmes, who served as state finance director during former Gov. Henry Bellmon's second term from 1987 to 1991. “The math is so obviously insane it can't work.”

Holmes, a regents professor of economics and department chairman at the University of Oklahoma, said he worries that reducing the state's personal income tax, without having another source of revenue to replace it or detailed cuts in state programs, will have a harmful effect on state services.

Voters in 1992 approved State Question 640, which requires that any tax increase receive three-fourths approval in the House of Representatives and Senate, or approval from voters. That makes it unlikely lawmakers could seek a tax increase of any kind if estimates of new revenue to the state are not achieved with lower personal income taxes, he said.

“The scariest part of this is if it doesn't work you can't fix it,” Holmes said during a seminar at the Oklahoma History Center sponsored by the Oklahoma Policy Institute, a nonprofit group that analyzes state government spending.

About two blocks away at the Capitol, several Republican House members attended a session sponsored by the Oklahoma Council of Public Affairs, a conservative think tank and a backer of a couple of proposals to reduce the top personal income tax rate of 5.25 percent by more than half.

“Now is not the time to settle for a minor reduction,” said Brian Bush, vice president of the Oklahoma Council of Public Affairs. “Now is the time to double the powder and shorten the fuse.”

Travis Brown, president of Let Voters Decide, a nonpartisan group in Missouri that is behind a signature drive to get an income tax-cutting plan on the ballot in November, had similar advice.

“Now is no time to let your foot off the gas pedal here,” he said. “You're very close to passing some major reforms that could be not only a real inspiration for real economic growth for your state but ... also an inspiration for ours to pass ours.”

Brown's group has spent about five years working to place on the ballot a constitutional amendment that would replace the state's income tax, which has a top rate of 6 percent, with a broader sales tax. Supporters have until early May to gather enough signatures to get the measure on the ballot.

Kansas eyes plan

Steve Anderson, budget director for the state of Kansas, said Gov. Sam Brownback sent a message that people eventually will live on the East and West coasts only for a view of the ocean as businesses will move to the central United States because of its strong work ethic and lack of a personal income tax.

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