Gov. Fallin signs income tax cut to take effect in 2015

OKLAHOMA CITY – Gov. Mary Fallin signed into law a .25 percent income tax reduction that will take effect on Jan. 1, 2015. If the state economy cooperates with continued economic growth, the rate would be trimmed another .15 percent in 2016. 

Upon full implementation in three years, the cut would put $237 million back into taxpayers’ pockets in the Sooner State. House Bill 2032, co-sponsored by the Republican legislative leadership, nips the top rate from 5.25 to 5.00 percent; the second contingent cut could take the levy to 4.85 percent.  

Fallin has touted the reduction as “landmark.” In a May 13 (Monday) release after she signed the legislation without holding a public ceremony, the state chief executive said, “One of the first questions I get when I am talking to business owners throughout the country is, ‘if I come to Oklahoma, are you going to raise my taxes?’ Passing a significant and responsible tax cut will help us to recruit these businesses and retain the ones we already have. Our tax cut will ultimately lead to more job opportunities for all Oklahomans.”

Gov.Fallin said the income tax reduction will eventually offset federal payroll tax hikes that occurred in January. However, the second cut is contingent on revenue growth in Fiscal Year 2016 equaling the fiscal impact of the .15 reduction. 

“We want to cut taxes responsibly. No one wants to starve state government of the resources it needs to fund priorities like education. The language of this tax cut bill was crafted in a way to ensure that we have enough growth revenue to pursue a significant tax cut,” Fallin said in the statement sent to CapitolBeatOK. 

The tax cut legislation included authorization of state Capitol repairs, leading Oklahoma City attorney Jerry Fent and other critics to assert that H.B. 2032 amounted to “log-rolling” – the unconstitutional combination of two issues in a single measure. However, the governor’s legislative allies, including state Sen. Clark Jolley, R-Edmond, say the single subject rule does not extend to appropriations measures. 

Also touting enactment of the tax cut were Speaker of the House T.W. Shannon, R-Lawton, and Senate President Pro Temp Brian Bingman, R-Sapulpa. 

Shannon, commenting on a day that included a private skull session with Republican National Committee Chairman Reince Priebus, said, “The way you grow an economy is by letting hard working people keep more of their hard earned money. Oklahoma has proven this conservative principle to be true over the past 15 years. By lowering the income tax rate, we are attracting skilled and educated workers to our state and making Oklahoma a leader in business and economic growth.”

During his stop in Oklahoma, Priebus touted both Fallin and Gov. Falllin as examples of the kinds of “transformational” leaders the Republican Party needs to succeed nationwide.

In his statement sent to CapitolBeatOK, Sen. Bingman said it is “the right time to responsibly reduce the tax burden on Oklahoma families. Businesses in the private sector are looking for certainty in this economy especially with so much uncertainty coming from our nation’s capital. By passing a tax cut now, the state of Oklahoma is sending a clear signal to businesses around the country looking to expand or relocate. We’re committed to lower taxes, to limited government, and we are open for business.” 

Delaying effective date of the two-stage income tax reduction served as preface to passage of a quarter-billion increase in state spending for Fiscal Year 2014.

Despite this year’s spending hike, legislative Democrats have fiercely criticized the income tax cut. 

In the final stages of budget debates (expected to wrap up this week in the Senate), Democrats have advocated higher increases for K-12 education, Higher Education and for targeted pay increases for state troopers, Corrections Department employees and other state government workers

You may contact Patrick B. McGuigan at and follow us on Twitter: @capitolbeatok.