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Straight shooting needed in Oklahoma tax cut trigger talks

by The Oklahoman Editorial Board Published: May 2, 2012

State revenues flourish when oil prices are high. Those prices are now running ahead of projections, so gross production tax collections on oil — but not on gas — are higher than projected.

The two-way trigger for gross production taxes isn't the case with income tax triggers. If economic growth triggers an incremental rate reduction, the rate won't automatically rise when the growth ends. If it did, it would be a tax increase. And raising taxes in Oklahoma is difficult under the state constitution — requiring voter approval or a legislative supermajority.

Politically, triggers have the advantage of conferring a benefit (lower taxes) but deferring the time frame. Whatever wrangling took place over the open carry law could be magnified in the tax cut debate precisely because income tax triggers are a one-way ticket to lower taxes no matter what happens to the economy.

Triggers should thus be weighed carefully. What works for gross production taxes may not be the best approach for income taxes.

A modest income tax cut is almost certain to happen in the 2012 Legislature. It should happen. The thing to watch, though, is the trigger mechanism for future cuts.

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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