OKLAHOMA CITY — A plan to overhaul and one day eliminate the state income tax passes the Oklahoma state senate this week.
The bill, which passed along strictly party lines, now heads to the house.
At the same time Thursday, statehouse Democrats are criticizing the idea as irresponsible.
The Governor’s tax plan aims to simplify the tax code by cutting the number of income tax brackets from seven to three and eventually phasing out income tax all together.
“The average Oklahoman needs to understand, while it may sound good to eliminate your income tax, the state will make it up with higher property taxes or sales taxes,” house Democrat Scott Inman said.
“What we’re really talking about is raising taxes somewhere else,” University of Oklahoma economics professor Cynthia Rogers said.
Rogers agrees eliminating Oklahoma’s income tax only shifts the tax burden to an increase in sales taxes or property taxes.
The only other option would be to cut state services.
“So the story is, if you’re going to have no income tax, you’re going to pay for it somewhere else. Local governments will find a way to raise money,” Rogers said.
“We don’t expect the governor’s proposal to be signed into law as it’s written,” Alex Weintz said, Gov. Fallin’s communications director.
Weintz admits the Governor’s current proposal stands virtually no chance of passing the statehouse and becoming law.
The goal remains to work out a more modest tax reform deal.
“You know the Governor does not intend to starve government or slash core services,” Weintz said. “What she wants to see is a reduction in income taxes for a majority of Oklahomans.”
The Oklahoma Tax Commission estimates the plan that passed the senate would reduce state revenues by more than a billion dollars over the next two years.
Again, the Governor’s goal remains negotiating some sort of compromise that may not be quite that bold.