Today, Americans for Tax Reform sent a letter to members of the Oklahoma state Senate and the Office of Governor Mary Fallin in strong opposition to Oklahoma HB 1381. 

HB 1381 would lead Oklahoma down a dangerous road that is becoming more-and-more popular amongst fiscally reckless and irresponsible state governments.  Enacting a “provider fee”, HB 1381 would levy a new 2% tax – though that tax rate could rise upwards of 4% – upon hospital revenues in the state. 

The new tax, a $118 million tax hike, would be funneled into a pool that would receive matching funds from the federal government’s Medicaid program.  The pool would then be redistributed to hospitals in Oklahoma.  This is essentially a shell game with taxpayer dollars with Oklahoma politicians cleverly gaming a failing welfare system. 

Despite the argument that the cost of the new tax will not be passed on to consumers because of Medicaid’s matching funds, it must be understood that it is not in the self interest of profit-seeking entities of such great size to incur these fees without passing on at least a portion of the burden to their consumers.

Finally, as ATR has noted in the past, “Giving additional money to states changes their ‘fiscal behavior,’ encouraging them to increase spending and taxes… States receive matching federal funds based on the revenue they collect. This encourages states to increase taxes to generate more revenue to receive more aid… Overall, these aid transfers to states are comparable to the parent who continually gives their spendthrift child more and more money every week. Rather than learning some fiscal restraint, the child continually spends with the assumption he will receive more.”

To read ATR’s letter to the Oklahoma state Senate click here.