CapitolBeatOK Staff Report
State Rep. David Dank (an Oklahoma City Republican) said today (Wednesday, January 5) he will use his chairmanship of the House Revenue and Taxation subcommittee to launch an in-depth study of Oklahoma’s tax system, with a goal of entirely eliminating the state personal income tax.
Dank said his other priority will be to fix the flawed tax credit system that has cost the state hundreds of millions of dollars in questionable tax credits in recent years.
“Job one has to be a complete review of our tax system. We are already being left behind in economic and job growth by states like Texas with no income tax,” Dank said. “If we are going to compete in the crucial next few years, we need to stop talking and start acting to dramatically reform our state tax system.”
Dank said he would favor completely eliminating the state personal income tax and replacing that revenue with a higher state sales tax on merchandise other than groceries and prescription drugs.
“Imagine never having to file an Oklahoma income tax form again, and having no more state income tax withheld from your paycheck,” Dank said. “A slightly higher state sales tax would replace that revenue and be so much more convenient for taxpayers.”
Dank noted a recent analysis of 2010 Census data showed that of the nine states with no income tax, seven were among the fastest growing in America. Texas and Florida will gain four and two congressional seats, respectively. Conversely, states with high personal income taxes like California and New York are steadily losing jobs and population.
“People go where they are not taxed to death,” he said. “It is time for Oklahoma to join the high-growth states. I strongly supported former Governor Keating’s initial efforts to reduce our high personal income tax rates, and those efforts have been of benefit, but small incremental reductions in the income tax rate will only nibble at the edges as long as the income tax rate on the other side of the Red River is zero.”
Dank said the other primary focus of his subcommittee will be a through examination of how the state issues tax credits to various businesses and industries.
“We have to get a handle on this process and take the decisions out of the hands of lobbyists, who have a vested interest in securing tax credits for their clients, and start applying some common sense rules,” he said. “Rule one is ‘does a proposed tax credit promise to truly create new jobs in substantial numbers?’”
Dank said a recent opinion issued by Attorney General Drew Edmondson at his request clarified many of the conditions under which tax credits may be authorized under the Oklahoma Constitution.
“It is apparent from that opinion that some of the tax credits currently on the books are unconstitutional,” he said. “We are going to go after those first, and then examine every other tax credit to see if it is actually doing what it promised.”
In addition to chairing the Revenue and Taxation subcommittee, Dank will serve on the House Appropriations and Budget, Rules, Insurance and Senior committees.