June 13, 2022
To: Members of the Oklahoma House of Representatives
From: Americans for Tax Reform
Re: Special Session & Tax Cuts
On behalf of Americans for Tax Reform (ATR) and our supporters across Oklahoma, I urge you to support reducing the state income tax, and eliminating the sales tax on groceries, during special session.
Oklahoma families and businesses are struggling against record inflation, especially sky-high energy costs, due to the Biden administration and Congressional Democrats spending record amounts, while refusing to expand fossil fuel supply. Passing permanent, meaningful tax relief for Oklahomans will let them keep more of their hard-earned money so they can decide how best to spend it, and counter inflation.
The state’s current income tax structure has six tax brackets, and a top rate of 4.75%. These burdens are scaring away people and investment. Without reform, Oklahoma will not keep up with the Republican-led states you must compete with in the post-pandemic era.
Eight states have no state income tax. Eight others have a flat rate tax, and 10 states have begun moving to phase out their income taxes. Last year 14 states cut their income taxes. New Hampshire passed reforms that will make it the ninth true no-income-tax state, joining Texas, Florida, Tennessee, Nevada, South Dakota, Washington, Wyoming, and Alaska.
Americans are voting with their feet and moving to low-tax states. The 10 states that gained the most residents from domestic in-migration had an average total state and local tax burden of 7.7% of income, compared to 10% of income for the 10 states that lost the most residents.
Oklahoma is certainly benefitting from these trends, but is not growing as fast as states like Florida, Nevada, Arizona, Idaho, or the Carolinas who have seen their populations grow by over 1% in 2021 alone.
Reducing, flattening, and eliminating the income tax would move Oklahoma to the top of the pack where the state belongs. Many states have used “revenue triggers” to reduce income tax rates against future growth – something Oklahoma had an imperfect version of in the past.
Using a revenue trigger model for reform – requiring state revenues to reach certain reasonable levels before the next reduction in income tax rate occurs – is a proven policy that can lock in income tax elimination over time, while avoiding unwelcome revenue surprises. North Carolina, Louisiana, and most recently, Indiana have used this policy to gradually reduce rates.
This guarantees savings for taxpayers, so that extra revenues do not serve as a feeding frenzy for big spending interests, but does so in a conservative, responsible way. It is a win-win to enact and protect tax cuts with responsible budgeting.
Eliminating the sales tax on groceries is a commonsense policy that will help families afford groceries – another area where inflation has hit hard. Oklahoma is one of only seven states that tax grocery staples at the full sales tax rate, making it an outlier. Reform would bring Oklahoma in line with the majority of other states.
ATR applauds you for approving legislation during regular session that would eventually eliminate the state income tax and advancing legislation to eliminate the sales tax on groceries out of committee. Further, you helped lead the way on corporate and individual income taxes last year.
With much agreement between Republican legislators and the Governor that Oklahomans need tax relief now, we urge you to enact permanent tax cuts. Conservative tax reform will supercharge the state’s economy, make it easier for families to build a future, and show Republicans are fighting back against the inflation driven by Democrats in Washington.