fd
It’s a massive win for Oklahoma taxpayers as the state’s House of Representatives overwhelmingly passed a plan to eliminate the state income tax this week.
The bill, House Bill 2950, is one of the best income tax elimination bills a state legislature has put forward. It is sponsored by Oklahoma House Speaker Charles McCall, Rep. Mark Lepak, Rep. Lonnie Sims, and Sen. Julie Daniels on the Senate side.
The legislation builds on the successes other red states have had in using revenue benchmarks to gradually reduce income tax rates. It moves to a flat tax, with increases to the standard deduction so folks don’t see a functional tax increase. Each year excess revenue growth goes beyond a $400 million trigger, the tax rate is reduced by .25%, this rate of reduction is lessened as the income tax reaches lower rates.
If it becomes law HB 2950 will make Oklahoma a leader among low tax states, and soon enough it would join the seven states that do not have an income tax.
“It is an understatement to say eliminating the state income tax would be game changer for Oklahoma, it would lead to massive investment, growth, and new taxpayers moving into the state,” said Americans for Tax Reform President Grover Norquist. “After major conservative policy accomplishments on school choice, corporate income taxes, and improvements to the criminal justice system, Oklahoma is becoming one of the most welcoming and dynamic states in the country.”
Governor Stitt and the House, under Speaker McCall, have remained focused on reforming Oklahoma’s income tax in recent years. And for good reason: Oklahomans pay a 4.75% income tax rate that is not indexed for inflation – despite grinding through the most rapid inflationary period in over three decades under President Biden. The multi-bracketed, complex progressive income tax system is completely failing to provide relief to lower earners as the top tax rate hits at just $7,200 of annual earnings. That hits 84% of Oklahomans.
With a surplus to work with, this session is a great opportunity to fix this issue. Yet, the revenue trigger approach to income tax reform is so effective and sustainable because it gradually reduces rates only when excess revenues grow large enough. This puts taxpayers first, as their burden gets reduced first when the state has extra money – rather than being up for grabs for special interests. It also ensures revenue shocks don’t threaten landmark tax reforms.
Grover Norquist added, “Governor Stitt and Speaker McCall have tirelessly led on tax relief for Oklahomans. With the passage of this tremendous plan to eliminate the income tax approved by the House, taxpayers should urge their Senators to vote yes.”