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Debating the Personal Income Tax

Filed by Michael Cross in Feature, Local News, News, Politics.
April 9, 2012

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Cutting Oklahoma’s Personal Income Tax could have a major impact on jobs and businesses in Oklahoma.

That’s the argument from both sides of the question of what to do with the revenue which brings in nearly a third of the state’s budget.

The same discussion at the same time only a few blocks from each other.

The Oklahoma Council of Public Affairs, a conservative think-tank held a discussion on eliminating the personal income tax on the first floor of the Capitol.

While in the Oklahoma History Center, the Oklahoma Policy Institute, a non-partisan group that studies government spending, held a forum against the proposal.

OCPA Vice President Brian Bush kicked off the discussion at the capitol with a crowd of about 30 mostly Republican lawmakers supporting the tax cut.

Bush told them they shouldn’t settle for a small reduction, but move forward to eliminate the income tax altogether.

“A Republican governor has a Republican majority in both houses and is sitting on the opportunity to do something that President Ronald Reagan made synonymous with being a republican: cut taxes.”

The legislature and Governor Fallin have run into difficulties in eliminating the income tax as bills to offset the cuts by reducing tax credits have failed.

The same thing is happening in Kansas according to that state’s Budget Director, Steve Anderson, one of the OCPA’s guests at the Capitol.

Anderson says he’s been working with Governor Sam Brownback to reduce his state’s personal income tax from nearly six and a half percent to below five percent.

He says no personal income tax would be great for businesses and needs to be accomplished across the region.

“I hope all of the states, including Missouri, move forward with a zero income tax because I think who we’re really competing against are the New Yorks, the New Jerseys, the Californias, as we know that’s where all the industry has been in this country.”

The state of Missouri was also represented at the OCPA forum.

Travis Brown and his group, Let Voters Decide, have been working the past six years to get an income tax bill on the state ballot.

Brown quotes a 2011 survey of senior executives who rated the states with the best business climate and three out of the top five were states without personal income tax.

“The state of Texas remained first since 1999, and this was among all senior executives that were responsible for relocating their business above a certain threshold and the top reason when asked why the state of Texas is number one was tax climate.”

That belief was strongly contested across the street in the Oklahoma History Center.

Justin McLaughlin, the VP of Economic Development for the Tulsa Chamber of Commerce quotes from a trade publication looking at area development.

McLaughlin talks about the top 25 reasons corporations give for relocating.

“Highways comes up as the number one, they have to have accessibility. Labor costs is always a factor and one thing I will note about this list: within the top 25, the personal income tax rate is not listed as a factor.”

Other reasons for relocation include skilled workforce, railroads and non-stop flights as well as state and local incentives like Oklahoma’s Quality Jobs Act.

Oklahoma City Chamber President and C-E-O Roy Williams calls the Quality Jobs Act one of the best incentives in the US.

Williams says the 5% rebates to companies for moving to Oklahoma is tied directly to the personal income tax.

“So any incremental decrease in the personal income tax or the elimination of it has the exact same impact on that incentive, so a partial reduction partially reduces that. A total, totally eliminates it.”

Williams says he’s met with GOP leaders in the House and Senate and no one seems to be talking about what to do if this happens.

McLaughlin told the crowd that elimination of the Quality Jobs Act keeps him up at night.

In the end, the forum’s moderator, former State Treasurer Scott Meacham says current tax policies certainly haven’t stopped companies from moving to Oklahoma.

“We’re not hearing anything from business other than we like the tax structure in Oklahoma. Google announced bringing new jobs to the state, Boeing, all these companies bringing jobs to the state. Why? Because they like Oklahoma and they like our tax structure.”

Meacham says Oklahoma is an incredibly low tax burden state and a low spending state with most people arguing the spending is too low especially for public safety, education and human services.

The forum also included several economists who warned that the elimination of the personal income tax would have a massive impact on state services.

Still others warned if local economies stop getting state funds they will be forced to make it up through increases in property and sales taxes as well as fees.

Check out the Storify version of Michael Cross’s live tweets from the forum at the Oklahoma History Center:

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