Tuesday, October 03, 2023

Small: Great opportunity for tax cuts

Great opportunity for tax cuts
By Jonathan Small

For both moral and fiscal reasons, the time is right to cut Oklahoma’s personal income tax.

The moral case is easy to make. Due to rampant inflation during the Biden presidency, families have steadily lost ground. Tax cuts will allow Oklahoma families to keep more of their earnings and help fill the hole.

As of June, real wages were down more than 5 percent since President Biden entered the Oval Office. The average worker has lost over $4,900 in real wages.

Inflation is a big reason why.

Prices are up 15.5 percent during Biden’s time in office. The average family of four is paying $13,717 per year, or $1,143 per month, more to purchase the same goods and services as in January 2021, according to estimates.

Those figures explain why so many voters rate the economy, and the general direction of our country, so poorly.

Reducing taxes is one way state policymakers can help the average family. And, contrary to what critics claim, cutting Oklahoma’s personal income tax will help most families.

Because of the way Oklahoma’s personal income is structured, with the top rate kicking it at a very low level of income, nearly all Oklahomans who work are subject to the top rate. Thus, a cut in that rate benefits Oklahomans at all income levels.

Lowering the income-tax rate also reduces the penalty on work and investment, which spurs people to invest more and create more jobs.

Gov. Kevin Stitt has called for a special session in October to cut the income tax.

On X (formerly Twitter), Stitt wrote, “I called a special session because we need to make government smaller, smarter, and serve you better. That starts with tax cuts— taking money out of government hands and back in yours.”

He’s received support from House Speaker Charles McCall, R-Atoka, who recently said, “I think we need to lower the tax rate here in the state of Oklahoma on the people in the state.”

The House speaker also noted that prior tax cuts have been associated with continued economic growth.

“It’s not surprising to me: We cut taxes in 2019 and 2020, and state revenues have continued to grow,” McCall said. “You let people spend the money the way they want to and everything else will work out just fine.”

Senate President Pro Tempore Greg Treat, R-Oklahoma City, has a long track record of supporting tax cuts and pro-economic-growth policy.

Opponents argue Oklahoma government can’t “afford” to cut taxes, but here’s the truth: Thanks to fiscally conservative budgeting – led by Treat, McCall, the majority in the Legislature and the governor – Oklahoma government now has billions in savings and can withstand a recession.

Families need the help. Our state economy needs the jolt. And our government will easily survive without higher tax rates. If this isn’t the time to cut taxes, when is?

Jonathan Small serves as president of the Oklahoma Council of Public Affairs.


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