OKLAHOMA CITY — Governor Mary Fallin and republican leaders unveiled their plan to cut income taxes in our state Thursday evening.
This press conference came after hours and hours of discussions between Gov. Fallin and the House Republican Caucus.
Officials said the proposal would represent a tax cut of more than $218 million within the next two years.
So how are they going to do it?
What’s going to replace the millions in lost revenue for the state?
See the details below.
JOINT PROPOSAL FOR INCOME TAX REDUCTION AND TAX CODE SIMPLIFICATION
LOWER RATES AND SIMPLER BRACKETS
– Reduce the top rate to 4.80% for tax years 2013 & 2014
– Simplify the brackets and rates (graduated rate system) and eliminate the existing marriage
Rates Single Brackets Marriage Brackets
1% 0 to 2,500 0 to 5,000
3.3% 2,501 to 7,500 5,001 to 15,000
4.80% 7,501 and over 15,001 and over
PERSONAL INCOME TAX REFORM
– Retain the full personal exemption of $1,000 per dependant on Oklahoma adjusted gross income for individuals making $35,000 or less and joint filers making $70,000 or less; eliminate the exemption for returns with income above those levels
– Eliminate the deduction for state income or sales taxes paid included within the federal itemized deductions. Oklahoma is one of only 7 states that allows the deduction of state taxes paid; and
– Eliminate the deduction for political contributions
TAX CREDITS ELIMINATED
– Recycling and Hazardous Waste; Manufacturing Gas Consumption; Energy Conservation Assistance Fund; Sale of National Historic Landmark; Employer Child Care Services; Child Care Center; Ad Valorem Credit for damaged/destroyed property; Small Business Guaranty Fee; Hepatitis A Immunization; Employer Credit for Wages and Modification for Injured Employees; Ethanol Facilities; Biodiesel Facility; Incentive District Investment; Poultry Litter Transportation; Film or Music Projects Investment; Dry Fire Hydrant or Water Storage; Specially Trained Canines; Computer Industry; Electric Motor Vehicle; Native American Employment; OSHA Safety Pays; Small Business Technology Transfers; Interest and Dividend Exemption; Swine and Poultry Producers; Police Corps Scholarship Program; Living Organ Donation; Competitive Livestock Show Award; Rural Economic Development Loan; Stafford Loan Origination Fee; New Computer & Data Processing Employees; Small Business Incubators
– Sponsors; Small Business Incubators
– Tenants; Oklahoma Capital Investment Board
Estimated impact to total personal income tax collections:
FY-13 ($ 32.7 million)
FY-14 ($102.0 million)
FUTURE TAX CUT TIED TO ONE-TIME REVENUE TRIGGER
– 5% Trigger; Based on growth of Personal Income Tax, Sales, Use, Motor Vehicle, and Corporate tax collections; Review to be only for Tax Year 2015; FY-13 Collections to the General Revenue Fund from the 5 sources used as a baseline
– 1 Rate Move: (.30%) to end at 4.50% top rate in Tax Year 2015
– The .30% reduction incurs an additional estimated cost of $171 million