Legislation that would trim Oklahoma’s personal income tax rate when state revenue increases has been approved by the state House of Representatives.
House members voted 54-40 for the Senate-passed measure that is one of Republican Gov. Mary Fallin’s top goals for the 2014 Legislature. It now goes to Fallin to be signed into law.
Twelve Republicans, including Rep. Pat Ownbey, R-Ardmore, and Rep. Tommy Hardin, R-Madill, joined with Democrats in voting against the bill. Both representatives cited fiscal responsibility in funding other items as the impetus for their actions.
“The balance between state obligations and taxes is a balancing act,” Ownbey said. “Based on this year’s $188 million budget shortfall, like the majority of my district, I do not believe it is a smart to cut the state income tax.
“We hear so much about other states cutting their income taxes. Yet in many cases, we discover successful income tax cut efforts have often involved offsetting tax code changes. For example, in Kansas, North Carolina and Ohio, the sales tax increased while Wisconsin eliminated tax breaks. In Oklahoma, the legislation has been reluctant to take those steps. In most cases, the loss of revenue inevitably involves trade-offs.”
Both Ownbey and Hardin spoke against tax cuts leading to Wednesday’s vote, with Hardin opposing the cuts dating back to last year because of the need to fund other programs.
“I don’t think it is appropriate at this time,” Hardin said. “We have a $188 million budget shortfall. We have teacher’s flex benefit costs going up and there are a lot of concerns about funding for them and funding other core government services.”
The measure will reduce the personal income tax rate from 5.25 percent to 5 percent in 2016 if state revenue projections are greater than projections in December 2014.
If growth continues, then a second reduction will take place, lowering the rate from 5 percent to 4.85 percent no sooner than two years after the 5 percent rate is enacted, providing that there is sufficient revenue to cover the cost of the reduction.
The Associated Press contributed to this report