OKLAHOMA CITY – House Republicans on Wednesday advanced a new income tax reduction measure that ensures Oklahomans receive either an income tax reduction or no tax change at all.
HB 3038 was signed out of the House General Conference Committee on Appropriations on Wednesday. The Senate now must act to advance it from the Senate General Conference Committee on Appropriations in order for it to be heard by both chambers.
“The House has kept this issue alive and it’s now up to the Senate to deliver tax relief for working Oklahomans,” said House Speaker Kris Steele, R-Shawnee. “The next step is for the Senate to hear the bill in their committee. I hope they pass this plan and uphold the commitment we’ve all made to the people of Oklahoma to lower their taxes. The ball is in their court.”
If House Bill 3038 is implemented, a large majority of taxpayers would receive tax reductions, a small amount would see no change and no taxpayers would experience a tax increase, according to the Oklahoma Tax Commission.
HB 3038 proposes three growth triggers that would reduce the top personal income tax rate to 4.5 percent within three to ten years, dependent upon revenue growth. Each trigger would result in a .25 percent reduction. In order for the trigger to take effect, there must be a 5 percent annual growth in collections of motor vehicle taxes, use taxes, sales taxes, income taxes and corporate taxes apportioned to the general fund (for details, see attached bill and attached summary document).
“This plan is a lot like the tax reductions Oklahoma Republicans have enacted consistently for nearly 15 years in order to lower the rate from 7 percent in 1998 to 5.25 percent today. It allows us to continue down that path in a responsible, methodical manner that won’t cause any taxpayers to pay more,” Steele said.
The new plan keeps the current tax bracket structure and personal exemption intact. The tax bracket structure change and personal exemption modification proposed in HB 3061 – the bill supported by Senate leaders – are among the reasons why some taxpayers would see a tax liability increase under HB 3061.
“The House won’t take up any bill that raises taxes. Raising taxes isn’t what conservatives stand for, it’s not what Republicans stand for and it’s not what the House stands for,” Steele said.
Rep. Leslie Obsorn, R-Mustang, said HB 3038 is a responsible way to continue the economic momentum Oklahoma has experienced in recent years.
“This is a simple, straightforward way to lower taxes without having to raise anyone’s taxes,” said Osborn, the principal House author of HB 3038. “It’s not overly complicated. It doesn’t pick winners and losers, like the previous plan. It just says when government revenues grow, tax reductions should occur. That’s what we fundamentally believe as Republicans.”
HB 3038 would not affect the proposed fiscal year 2013 state budget because it does not mandate a tax reduction in fiscal year 2013.
“It won’t cost us a cent next year,” said Rep. Earl Sears, R-Bartlesville, chairman of the House Appropriations and Budget Committee. “It’s a win-win deal. Tying these triggered tax cuts to actual growth makes them far easier to pay for because they won’t go into effect unless the state has far more revenue than it did the previous year.”