Path Home Shows 2012 Show Archive February 2012 Show 1207 Personal Income Tax - Should We or Shouldn't We?

Personal Income Tax - Should We or Shouldn't We?

We focus on the debate over whether our state taxes should be cut since state revenues are up.

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Oklahoma Legislature

Show Dates

Show 1207: Personal Income Tax - Should We or Shouldn't We?

Air date: February 12, 2012

 

Transcript

ROB MCCLENDON:  WELL WHEN LAWMAKERS CONVENED THIS PAST WEEK AT THE STATE CAPITOL, THEY BEGAN A NEW LEGISLATIVE SESSION WITHOUT THE HUGE BUDGET GAPS THEY HAVE HAD TO WORK WITH FOR THE PAST COUPLE OF YEARS.  WITH ONE OF THE NATION’S FASTEST GROWING ECONOMIES, REVENUES INTO OKLAHOMA’S STATE COFFERS HAVE EXCEEDED MOST EXPECTATIONS.  AND WHILE THE STATE IS STILL FAR FROM FLUSH WITH CASH, THE TALK ON LINCOLN BOULEVARD IS WHAT TO DO WITH THE NEW INCOME.  DO WE CUT TAXES?  PUT IT AWAY FOR A RAINY DAY?  OR RESTORE STATE SERVICES THAT HAVE BEEN CUT BY OVER TWENTY PERCENT IN THE PAST COUPLE OF YEARS.  AND IT’S THE FIRST OF THOSE QUESTIONS, SHOULD WE CUT TAXES, THAT WE WILL FOCUS ON TODAY.  AND HERE TO START US OFF IS OUR COURTENAY DEHOFF.

COURTENAY:  WELL ROB, NOBODY LIKES TAXES.  OR AT LEAST NOBODY I KNOW LIKES TAXES.  BUT WE DO ALL ENJOY THE SERVICES THAT THEY PROVIDE WHETHER IT BE MY EDUCATION AT A STATE UNIVERSITY, OR THE ROAD YOU DROVE IN ON TODAY.  AND PERHAPS THE HOTTEST ISSUE UP FOR DEBATE BY THE STATE LEGISLATURE IS WHETHER OR NOT TO DO AWAY WITH OKLAHOMA’S PERSONAL INCOME TAX.

GOVERNOR MARY FALLIN:  AND OKLAHOMA, I BELIEVE, STANDS IN TESTAMENT TO THE FACT THAT LOW TAXES, LIMITED GOVERNMENT, FISCAL DISCIPLINE IS A RECIPE FOR JOB CREATION.

COURTENAY:  IN HER STATE-OF-THE-STATE ADDRESS, GOVERNOR MARY FALLIN OUTLINED A PLAN THAT WOULD ELIMINATE STATE INCOME TAX FOR OKLAHOMANS MAKING LESS THAN THIRTY THOUSAND, CUT IT MORE THAN IN HALF FOR OKLAHOMA FAMILIES MAKING FROM THIRTY TO SEVENTY THOUSAND DOLLARS A YEAR, AND FOR THOSE MAKING MORE THAN SEVENTY THOUSAND DOLLARS A YEAR THE TAX DROPS TO THREE-POINT-FIVE PERCENT.

FALLIN:  I BELIEVE OUR PLAN IS A GAME CHANGER FOR OUR STATE.  IT’S A JOB CREATOR.  AND IT PROVIDES BROAD-BASED TAX RELIEF TO THE MIDDLE CLASS WITHOUT STARVING STATE GOVERNMENT AND WITHOUT HURTING THE POOR.

COURTENAY:  FALLIN SAYS SHE HOPES TO PAY FOR THE CUTS BY ELIMINATING LOOP HOLES IN THE TAX SYSTEM, STREAMLINING GOVERNMENT, AND CAPITALIZING ON POTENTIAL ECONOMIC GROWTH.

FALLIN:  SO TODAY, I’M ASKING OUR LAWMAKERS TO JOIN ME IN AN AMBITIOUS AND EXCITING UNDERTAKING, THE PASSAGE OF A BOLD TAX REFORM PLAN THAT WILL REPRESENT THE MOST SIGNIFICANT TAX CUT IN OKLAHOMA’S HISTORY.

COURTENAY:  AND BY THE RECEPTION SHE RECEIVED, THAT IS WHAT MANY STATE LAWMAKERS PLAN TO DO.

DAVID HOLT:  IF WE REALLY WANT TO BE THE BEST STATE TO DO BUSINESS IN AMERICA, AND I DON’T SEE WHY WE SHOULDN’T, WE NEED TO DO SOMETHING ABOUT OUR INCOME TAX RATE.

COURTENAY:  SENATOR DAVID HOLT AND TWENTY-SIX OTHER SPONSORS ARE INTRODUCING A BILL TO PHASE OUT THE PERSONAL INCOME TAX.

HOLT:  WHAT I REALLY WANT, WE’VE GOT TO GET IT DOWN.  WE HAVE GOT TO START LOWERING IT AND THEN WE CAN KEEP TALKING ABOUT PHASING IT OUT, I THINK, AS THE YEARS GO ON EVEN IF THAT’S NOT WHAT WE DO THIS YEAR.

COURTENAY:  LAST YEAR STATE INCOME TAX COLLECTIONS MADE UP THIRTY-SIX PERCENT OF THE STATE’S GENERAL REVENUE FUND.  TAX DOLLARS THAT SUPPORT STATE SERVICES LIKE SCHOOLS AND BRIDGES.

SCOTT INMAN:  WE NEED A TAX SYSTEM THAT WORKS FOR THE PEOPLE OF OKLAHOMA, THAT DOESN’T BURDEN WORKING FAMILIES, AND THAT DOESN’T SERVE AS AN IMPEDIMENT TO THE BUSINESSES IN THIS STATE.

COURTENAY:  REPRESENTATIVE SCOTT INMAN OPPOSES DOING AWAY WITH THE PERSONAL INCOME TAX, BUT UNDERSTANDS WHY OKLAHOMANS MAY BE ATTRACTED TO ITS ELIMINATION.

INMAN:  NO ONE WANTS TO PAY INCOME TAX IF THEY DON’T HAVE TO.  A MATTER OF FACT, MOST OF MY CONSTITUENTS IN DEL CITY AND SOUTH OKLAHOMA CITY WOULD LOVE TO PAY NO INCOME TAX.

COURTENAY:  YET, PAYING LOWER STATE INCOME TAXES WOULD NOT NECESSARILY LOWER OKLAHOMANS OVERALL TAX BURDEN.

INMAN:  THAT PLAN IN ELIMINATING AND STARTING TO GRADUALLY REDUCE THE INCOME TAX IN OKLAHOMA WOULD ACTUALLY RAISE TAXES ON OVER SIXTY FIVE PERCENT OF THE PEOPLE IN THE STATE.

COURTENAY:  THAT IS BECAUSE UNDER THE GOVERNOR’S PROPOSAL OKLAHOMA WOULD PAY FOR THE TAX CUTS BY ELIMINATING THIRTY-NINE TAX CREDITS ALONG WITH PERSONAL EXEMPTIONS THAT EIGHTY PERCENT OF OKLAHOMANS CLAIM.  REPRESENTATIVE DAVID DANK LED A LEGISLATIVE TASK FORCE TARGETING TAX CREDITS AND BELIEVES THAT BY ELIMINATING MANY OF THESE, THE STATE WILL BE ABLE TO LOWER ITS INCOME TAX RATE.

DAVID DANK:  NOBODY IN THIS LEGISLATURE WOULD LIKE TO GET RID OF THE INCOME TAX MORE THAN ME.  I HAD A LESSON YEARS AGO, WHEN J C PENNY COMPANY MOVED TO DALLAS, TEXAS, I WAS ON THE BOARD OF THE EXECUTIVE COMMITTEE OF THE NATIONAL RETAIL FEDERATION.  AND I ASKED JIM, I SAID, HOW COME YOU ARE TAKING THIS HUGE OPERATION, ALL THESE HIGH-POWERED JOBS TO TEXAS INSTEAD OF OKLAHOMA, TO TULSA?  AND HE SAID, DAVID, THE ONLY WAY I CAN GET MY BRAIN TRUST OUT OF NEW YORK CITY, MY MARKETERS, MY MERCHANDISERS, MY LEGAL PEOPLE, ALL THESE PEOPLE, THESE HIGH PAID JOBS IS TO GO TO A STATE WITHOUT AN INCOME TAX.

COURTENAY:  BUT, WHAT IS GOOD FOR HIGH WAGE EARNERS MAY ACTUALLY HURT THE MIDDLE CLASS.  OKLAHOMA COMMERCE DEPARTMENT ECONOMIST DEIDRE MYERS.

DEIDRE MYERS:  WE WANT TO LOOK AT THE OVERALL TAX BURDEN THAT A HOUSEHOLD OR A BUSINESS WOULD HAVE.  SO IT’S IMPORTANT TO LOOK AT THINGS SUCH AS PROPERTY TAX, SALES TAX, ALONG WITH INCOME TAX.

COURTENAY:  TAKE OUR NEIGHBORS TO THE SOUTH FOR EXAMPLE.  TEXAS IS ONE OF NINE STATES WITHOUT A STATE INCOME TAX; WHICH MEANS TEXANS FUND THEIR STATE GOVERNMENT WITH A MUCH HIGHER SALES TAX, NOT TO MENTION THEIR HIGHER PROPERTY TAXES.

MYERS:  TEXAS PROPERTY TAX IS ON AVERAGE THREE TIMES HIGHER THAN AN AVERAGE HOME IN OKLAHOMA.  THEY ACTUALLY PAY, IF YOU HAVE THE SAME HOUSE, THEY OWN A HOME, THEY ACTUALLY PAY 30% MORE IN OVERALL TAX BURDEN BECAUSE OF THE HIGHER PROPERTY TAXES IN TEXAS.

COURTENAY:  ACCORDING TO THE GOVERNOR’S OFFICE, FALLIN’S INCOME TAX PLAN WILL COST THE STATE ABOUT ONE BILLION IN REVENUE OF THE STATE’S SIX-POINT-FOUR BILLION DOLLAR BUDGET CREATING A HOLE SOME FEAR CANNOT BE PLUGGED BY THE COST CUTTING MEASURES THE GOVERNOR HAS SUGGESTED.

JEFF MILLS:  I DEFINITELY THINK THAT YOU HURT THE CITIES AND THE CHAMBERS OF COMMERCE.  I THINK IT MAKES IT VERY, VERY DIFFICULT ON THEM, BECAUSE THERE IS A SHIFT; THERE IS A TAX SHIFT AND WHO IS GOING TO PICK THAT UP.  WELL IF YOU SHIFT ALL OF THAT TAX TO A BUSINESS OR SOME OTHER TYPE OF ENTITY TO TRY TO MAKE UP THAT REVENUE, THAT’S NOT BUSINESS FRIENDLY EITHER.

COURTENAY:  JEFF MILLS IS EXECUTIVE DIRECTOR OF THE OKLAHOMA STATE SCHOOL BOARD, AND QUESTIONS WHY STATE LAWMAKERS ARE WANTING TO CHANGE OUR TAX CODE, WHEN INCREASES IN OKLAHOMA PER CAPITA INCOME IS BETTER THAN ALL BUT ONE OF THE STATES WITH NO INCOME TAX.

MILLS:  FROM THE INFORMATION I HAVE RECEIVED AND THE READING I’VE DONE WE’RE BEATING TEXAS ON THE ECONOMY.  YOU KNOW, OKLAHOMA IS DOING QUITE WELL.  WE’RE DOING IT WITH AN INCOME TAX THAT MAY BE SLIGHTLY HIGHER, BUT WHEN YOU LOOK AT THE OVERALL TAX OF OUR CITIZENS WE’RE THIRTY-SEVENTH IN THE COUNTRY.

COURTENAY:  YET WITH MULTIPLE TAX CUTTING PLANS ON THIS SPRING’S LEGISLATIVE AGENDA, ODDS ARE SOME TYPE OF INCOME TAX CUTTING PLAN WILL EMERGE.  BUT BEFORE IT DOES.

BRIAN BINGMAN:  SO I JUST THINK WE REALLY NEED TO DO OUR HOMEWORK AS WE MOVE FORWARD.

COURTENAY:  SENATE PRESIDENT BRIAN BINGMAN.

BINGMAN:  I JUST WANT TO BE VERY CAUTIOUS.  BECAUSE ONCE YOU REDUCE THE INCOME TAX, WE’RE NEVER GOING TO GO BACK.  WE’VE JUST GOING TO MAKE SURE THAT WE’RE OFFSETTING IT WITH OTHER INCOME.

KRIS STEELE:  WE’RE GOING TO CONSIDER ANY AND ALL IDEAS WITH THE END GOAL OF REDUCING OUR STATE’S INCOME TAX, BUT ULTIMATELY, COLLECTIVELY WE WILL DECIDE HOW TO ACCOMPLISH THAT GOAL IN A WAY THAT IS IN THE BEST INTEREST OF OUR STATE.

COURTENAY:  SPEAKER OF THE HOUSE, KRIS STEELE, AGREES WE MUST GO SLOW.

STEELE:  WE’RE VERY INTERESTED IN REDUCING OUR STATE’S INCOME TAX, ULTIMATELY MAYBE EVEN PHASING IT OUT.  BUT WE DO BELIEVE THAT WE NEED TO TAKE A VERY METHODICAL, LOGICAL, STEADY APPROACH.

COURTENAY:  THAT WILL NOT HARM THE MIDDLE CLASS BUT WILL ENCOURAGE ECONOMIC GROWTH.

COURTENAY:  GOVERNOR MARY FALLIN SAYS HER GOAL IS TO REDUCE THE STATE’S PERSONAL INCOME TAX TO AROUND THREE PERCENT OVER THE NEXT SEVERAL YEARS WHICH IS LESS THAN HALF OF WHAT IT WAS JUST A FEW YEARS AGO.

ROB:  AND YOU KNOW I THINK IT IS INTERESTING IN WATCHING YOUR STORY THAT THE HIGHER UP THE LAWMAKERS ARE IN LEADERSHIP POSITIONS, THE MORE CAUTIOUS THEY ARE ABOUT REDUCING THE STATE INCOME TAX.

COURTENAY:  WELL IT CERTAINLY MAKES SENSE, BECAUSE AT THE END OF THE DAY THOSE ARE GOING TO BE THE GUYS THAT ARE SITTING DOWN TRYING TO MAKE THE BUDGET BALANCE FOR NEXT YEAR.

ROB:  THANK YOU SO MUCH COURTENAY.  NOW WHEN WE RETURN, I WILL SIT DOWN WITH AN ECONOMIST WHO SAYS WHEN IT COMES TO REDUCING THE STATE INCOME TAX, NOT ONLY DO WE WANT TO GO SLOW, WE MAY NOT WANT TO GO THERE AT ALL.