OKLAHOMA CITY (AP) - A plan to cut Oklahoma’s corporate and individual income tax rates once revenue benchmarks are reached passed a Senate committee on Tuesday, although it’s likely the plan will undergo additional changes.
The House and Senate each have separate proposals to reduce the state’s top individual income tax rate from 5.25 percent to 5 percent, once certain revenue growth triggers are met.
The House-backed plan, approved on an 8-2 vote by the Senate Finance Committee, would drop the rate once collections to the state’s General Revenue Fund, the main operating fund for state government, grow by enough to offset the lost revenue. The cost of such a reduction is estimated to be about $147 million annually.
The House bill also includes a separate trigger to drop the corporate income tax rate from 6 percent to 5 percent once revenue collections are projected to grow enough to offset the cost. Although corporate income tax collections are significantly more volatile than individual income tax collections, the 1 percentage point drop is expected to cost the state about $53 million when fully implemented.
The earliest that either cut could take effect is in the tax year 2015.
Sen. Mike Mazzei, a key Senate negotiator on tax policy, said it’s too early to tell which version House and Senate leaders will ultimately agree upon.
“We’re discussing both bills and talking about how to find a final version of the tax cut,” said Mazzei, R-Tulsa.
The Senate’s tax cut proposal would drop the income tax rate from 5.25 percent to 5 percent once overall collections to the state’s General Revenue Fund return to 2013 levels. The Senate’s version also includes a second cut to 4.85 percent triggered by growth revenue.
Gov. Mary Fallin has been calling for a reduction in the state’s income tax rate for three years, arguing that it will help Oklahoma’s economy continue to grow.
Democrats and some Republicans have argued it’s fiscally irresponsible to implement a tax cut when funding for state services like K-12 education and public safety are woefully inadequate.
The Senate tax cut bill is expected to be considered by a House committee next week.
___
Online:
House Bill 2508: https://bit.ly/Nx4awZ
Senate Bill 1246: https://bit.ly/1geVAeQ
Please read our comment policy before commenting.