As Fallin’s tax reform package is prepared for introduction, forward progress for other versions of income tax phase out

Several proposals to cut state income taxes and/or put Oklahoma on a glide path to abolition of the unpopular levy have already cleared first steps toward passage. This week, Governor Mary Fallin’s proposal for what she deemed “the most significant tax cut in state history” will be formally introduced with a powerful pair of sponsors: Speaker of the House Kris Steele and President Pro Temp Brian Bingman. 

In the past two weeks, two House proposals and one Senate measure to achieve income tax reductions along the lines advocated by economist Arthur Laffer have passed their first tests. Another less dramatic proposal has cleared a Senate panel. The stage is set for formal presentation of the governor’s plan. 

House Bill 3038, co-authored by 23 members of the lower chamber, cleared its first subcommittee deliberation. Sponsors include state Reps. Leslie Osborn of Tuttle, Tom Newell of Seminole, Jason Murphey of Guthrie, Charles Ortega of Altus and Harold Wright of Weatherford.

Then, state Rep. David Brumbaugh of Broken Arrow advanced House Bill 2649 through the Appropriations & Budget Subcommittee on Revenue & Taxation. Both proposals moved ahead with bipartisan support.
Additionally, the Senate Finance Committee has approved Senate Bill 1571 by Clark Jolley of Edmond, chairman of the Senate Appropriations Committee. 

Brumbaugh’s comments, sent to CapitolBeatOK, reflect the views of many of his conservative colleagues. He asserts, “It’s time for us to usher in a new era of job creation and prosperity in Oklahoma. It is possible, and appropriate, for us to transform Oklahoma into the best business climate in America, without raising other taxes, all while providing the core services Oklahoma families depend on.”

The bills include some distinctive proposals, but most share the objective of phasing out the income tax with a simpler tax code, reductions in “wasteful and nonessential” state spending, and a long enough time period (a decade or more) for growth in the economy to offset much of the flatter growth in tax revenues. 

Brumbaugh contends, “By making modest reductions in inefficient and unnecessary spending areas, we can avoid reducing core government services such as education, public safety, road and bridge repair, and the safety net for the truly needy.

The chief executive’s State of the State speech, where she outlined her proposal, drew enthusiastic applause from the Wall Street Journal and a variety of conservative/libertarian think tanks. Supportive words have come not only from OCPA, but also from American For Prosperity and several national groups. 

Opposing the drive to reduce and eliminate state income taxes is the Oklahoma Policy Institute, a Tulsa-based organization, and the Institute on Taxation and Economic Policy, a national group that has sought to “debunk” Dr. Laffer’s econometic assumptions. Reactions from editorials boards have generally ranged from skeptical to hostile, with scattered support from some publications. 

Democrats at the Legislature have been generally critical, including House Minority Leader Scott Inman

Late last week, Steele and Bingman pledged to advance Governor Fallin’s version of an income tax phase out. Both expressed caution but support for the objective of a lower income tax burden, then eventual elimination of the income tax.