This could be the year for nation-leading tax reform in Oklahoma.
Oklahoma has made progress on reducing the state’s tax burden, passing reductions to the corporate and personal income tax rates in recent years. Yet, the state is behind regional competitors like Texas, Louisiana, and Colorado that have trimmed down to lower rates, or have no income tax at all. Neighboring Kansas passed legislation to cut their income tax and go to a flat tax, while eliminating the sales tax on groceries.
That’s not to mention other states around the country, like Tennessee and Florida, that have no income tax and are seeing their growth skyrocket. More than 20 states have cut income taxes since 2020. The work-from-home era and reshuffling of businesses has created a climate of opportunity for states like Oklahoma. The state has grown, but further empowering citizens and letting them keep more of their earnings would supercharge that growth.
Governor Stitt and many legislators have a vision to do that, competing nationally, for jobs, businesses, and growing families. House Bill 2285 is the best blueprint to accomplish that vision this session.
The bill, which has already been approved by the House, would move Oklahoma to a flat tax of 4.50%, increasing the standard deduction so lower-income brackets don’t see a net tax increase.
It puts Oklahoma taxpayers first by using excess revenues to permanently reduce the income tax rate, a policy often referred to as revenue triggers, until the rate reaches 2.75% – the second lowest flat income tax rate in the nation.
It is the low tax states that are winning the competition. From April 2020 to July 2022, the 15 lowest-tax states gained 2.3 million people, or 2.2% of their population. The 15 highest-tax states lost 1.2 million people or 1% of their population. Texas and Florida increased their populations by 1.6 million people combined.
A Tax Foundation analysis revealed states lost 1% of their population for every two points of income tax.
A session where school choice legislation and a transformational tax cut pass would send a clear message that Oklahoma is here to join the ranks of the fastest growing U.S. states.
These would be historic accomplishments for current legislators and the Governor. It’s an admirable and important thing for a state to maintain an already competitive tax rate, it’s another to go from the back half of the pack to the front.
View ATR’s letter of support HERE.