Tax-a-peel: Reality takes bite out of cut plans

The Oklahoman Editorial Published: April 3, 2012

An app a day keeps the games in play and political reality is taking a bite out of the tax cut apple. When all is said and scanned, the state's personal income tax cut may be like the pricing of apps used on iPads and iPhones: It could end in a .99.

A 4.99 percent rate is better than the current 5.25 but a far cry from the proposals downloaded as recently as late January. Gov. Mary Fallin wanted an immediate cut to 3.25 percent, on the way to elimination of the personal income tax. Instead, lawmakers may slice a percentage point off the top rate but no more.

Still, a drop to 4.25 percent is significant in terms of savings to middle- and upper-income taxpayers and in terms of what it will cost the state treasury. It's also psychologically important. There's a reason apps go for $1.99 instead of $2. Buyers focus on the fact that $1.99 is less than $2, but they discount the fact that the difference is only a penny.

Getting the Oklahoma income tax rate below 5 percent has long been a goal of Republicans. It has long enjoyed The Oklahoman's support. Not so long ago, the top rate was above 7 percent. The Republicans now in control of state government had within their grasp a chance to peel at least 2 percentage points from the current rate.

Status quo backers marshaled their efforts to prevent any cuts. They cited dire statistics on the effect of cuts on state services. In the end, though, it was the revenue offsets that put the inchworm into this apple. Taxpayers want lower tax rates, but they're also reluctant to give up their tax credits and deductions.

Tax cutters likely won't leave the orchard with an empty basket, but the core plan of an income tax phaseout seems in need of an update to a modest reduction.


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