OKLAHOMA voters will consider six state questions on the ballot this year, including two significant measures that impact taxes.
State Question 766 would exempt all intangible personal property from ad valorem taxation. A 2009 state Supreme Court decision dramatically expanded the amount of intangible property subject to local assessment. That could result in up to $60 million in new tax collections.
Defining “intangible” property isn't easy. Oklahoma businesses could be taxed for things such as customer lists, employment contracts, advertising, copyrights and more. Individuals could technically face a tax on everything from a hunting lease to cellphone apps to a nurse's license and even unredeemed life insurance policies. The possibilities are endless.
Businesses and citizens already pay income tax, sales tax and property tax. Adding an intangible property tax is unwarranted overkill. If an intangible tax is imposed, Oklahoma businesses could be at a disadvantage with competitors in surrounding states. Some companies might shift operations out of Oklahoma; growth at other businesses would be restrained.
SQ 766 repeals some existing taxation of intangible assets that are now centrally assessed through the state Board of Equalization. That could result in a loss of as much as $68 million to local taxing jurisdictions. However, routine growth in property tax collections will likely offset that loss. K-12 education funding alone has increased as much as $56 million in a single year due to ad valorem increases.
While this change could have a slight impact on schools, it will likely be both minor and short-lived, and that disadvantage doesn't outweigh the far greater negative consequence of imposing a broad-based intangible tax in Oklahoma.
To oppose this tax increase, we urge Oklahomans to vote “yes” on SQ 766.
State Question 758 would limit the growth of property valuations to 3 percent annually. The current cap is 5 percent. Under SQ 758, property tax collections will continue to increase, just not as fast. Some property tax recipients, particularly schools, may argue this is a cut, but that's not the case. SQ 758 would result in slower growth of tax collections, not a cut.