New proposal contains no tax increases
“We came here to lower taxes for hardworking Oklahomans we’re going to do exactly that with this new plan,” said House Speaker Kris Steele, R-Shawnee. “We’re excited about this plan, we believe in this plan and we’re going to pass this plan along to the Senate. Anyone who is for lower taxes should be for this plan.”
The new plan 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. The criteria for the triggers are the same criteria used for the trigger in HB 3061, the previous income tax reduction proposal.
The new income tax plan will be contained in an amended version of HB 3038 that will be introduced during the House General Conference Committee on Appropriations meeting at 1:30 p.m. Wednesday.
|Speaker Kris Steele|
“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 are among the reasons why some taxpayers would see a tax liability increase under HB 3061.
“This House cannot fully embrace that plan because it would raise the tax liability of too many Oklahomans,” Steele said. “While the bill as a whole does represent a net tax decrease, we just can’t embrace the portion of it that leads to a tax increase. We had serious discussions about this matter and have come out more determined than ever to reduce taxes for all Oklahomans.”
House Republicans rallied in support of the new plan.
|Rep. Leslie Osborn|
“This is a simple, straightforward way to lower taxes without any having to raise anyone’s taxes,” said Rep. Leslie Osborn, R-Mustang, the principal House author of HB 3038. “It’s not overly complicated. It just says when government revenues grow, tax reductions should occur. That’s what we fundamentally believe as Republicans.”
The new plan 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.”
The earliest possible trigger would be for fiscal year 2014. Preliminary Tax Commission estimates show the cost of the first trigger as $120.5 million, $152.3 million for the second trigger and $172.9 million for the third trigger. The cost of each trigger would be spread across two fiscal years due to the difference between tax years and fiscal years.
“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,” Sears said.