Significant cut in Oklahoma's personal income tax doubtful, legislator says
Oklahoma lawmakers so far have been unwilling to cut corporate tax credits, which are called for in income tax-cutting proposals that would lower the top rate of 5.25 percent by at least 2 percent.
Reducing the state personal income tax rate just below 5 percent may be the best lawmakers can do this session, a key legislator involved in efforts to slash the tax said Wednesday.
“I don't know what we're going to come out with, but it's going to be a lot less reduction in income tax than what the one side wants and probably a little more what we want,” said Rep. David Dank after two proposals to reduce the personal income tax won approval from a House budget
“The main thing is that the Legislature is going to have to deal with the credits and the exemptions and the deductions and if they don't do that then probably there will be very, very minor cuts in the income tax,” said Dank, R-Oklahoma City. “We're threadbare right now. We just don't have the extra money unless you put the cuts in there.
“And we can't just pull some number out of the air and say it's going to generate this much growth,” he said.
Gov. Mary Fallin and about one-third of the House Republicans have rallied around proposals to reduce the state's top personal income tax to 3.5 percent or as low as 2.25 percent.
Dank said he expects a compromise will be made by members of the House and Senate and the governor's office by late April.
Dank said lawmakers have a responsibility to fund core services, such as education, transportation, public safety and health and human services. Those make up nearly 90 percent of the legislative-appropriated budget.
Income tax revenues
Personal income taxes bring in about 30 percent of the money legislators appropriate; this fiscal year personal income taxes are expected to bring in about $1.9 billion of the $6.4 billion appropriated by lawmakers.
That doesn't count nearly $800 million generated by
“If the Legislature has the will to make the cuts, to get rid of some of these tax credits that I think benefit the industry far more than it does the taxpayers, then we can make some meaningful cuts,” Dank said.
“If they don't, I don't think we can.”
Dank said the most realistic tax-cutting measure among five remaining bills is Senate Bill 1437. It and SB 1623 won approval Wednesday by the House of Representative Appropriations and Budget Committee. Both now go to the full House.
What the bills would do
SB 1437, which the committee passed 13-5, would reduce the top personal income tax rate by half a percent to 4.75 percent by 2015. It would further reduce the top tax rate to 4.5 percent in 2016 and subsequent years contingent upon a determination required to be made by the State Board of Equalization. It also would reduce the top corporate income tax rate from 6 percent to 5 percent effective Jan. 1.
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