Oklahoma Governor Mary Fallin seeks “most significant tax cut in state history

In her State of the State address today (Monday, February 6), Oklahoma Governor Mary Fallin has asked legislators to approve what she called “the most significant tax cut in state history.”

In her prepared text, the state’s chief executive asked lawmakers to
join her in “an ambitious and exciting undertaking” intended to reform
“the tax code, and chart a course towards the gradual elimination of the
income tax.”

Deemed “The Oklahoma Tax Reduction and Simplification Act” the measure
would, Fallin said, “immediately cut income taxes for Oklahomans in all
tax brackets” and “simplify the tax code.”

Fallin said approval by the Legislature would “give Oklahoma the lowest income tax rate in the region besides Texas, making us a more competitive state for those looking to move jobs here.” She reiterated a key conservative public policy objective: “Over time, our income tax would be phased out for every Oklahoman.”

Fallin continued making her case, saying to legislators, “Our plan is a game-changer for Oklahoma. It’s a job-creator. And it provides broad based tax relief to the middle class without starving government or hurting the working poor. It also protects core government services.”

Fallin’s speech fleshed out details of a dramatic plan she sketched to reporters last week:

“It would, beginning on January 1, 2013, replace our current system, which taxes the first penny that every Oklahoman makes. It reduces the seven brackets we currently have to 3 lower and flatter rates:

“Those couples making $0 to $30,000 a year will now pay nothing in state taxes. For those making $30,000 to $70,000 a year, the tax rate will be 2.5 percent. [Note: Soon after her speech on Monday, the governor revised the 2.5 percent rate to read ‘2.25 percent’.]

“And for families making over $70,000 a year, the rate will be 3.5 percent, as opposed to the 5.25 percent rate they are currently paying.

“Under these new rates, a middle class couple making $40,000 a year, for example, will pay 37 percent less in taxes in 2013, with additional cuts in future years.

“These tax cuts would take place immediately, in year one. Moving forward, tax rates would be cut by an additional quarter point in any year which the state of Oklahoma hits a revenue growth trigger of 5%. That growth trigger gives the state a safety net should we experience another economic downturn.

“I want to commend Representative [David] Dank of Oklahoma City, Senator [Mike] Mazzei [of Tulsa], many of our legislators and others who have worked to reexamine our tax code and tax incentives.

“We have a common goal: to lessen the tax burden on Oklahomans, and to do it in a responsible manner.

“The question remains, how will we pay for a tax cut? Under the Oklahoma Tax Reduction and Simplification Act, we do it in three ways:

First, by eliminating tax loopholes, carve-outs and other exceptions.

Second, by continuing to eliminate government waste and making government more efficient and effective. We’ve already proven that we can find substantial savings through government modernization initiatives.

Third, by capitalizing on economic growth we expect to see as a result of our pro-jobs, pro-business policies.

“According to Americans for Prosperity, non-income tax states have seen 59 percent economic growth over the past decade, versus just 38 percent for high income tax states. Additionally, job growth has increased significantly in non-income tax states, while high tax states have actually lost jobs.

“New jobs and increased investments in Oklahoma will lead to more revenue and increased collections in sales tax, corporate tax, excise tax and more.

“With all of that in mind, I am asking for your support of the Oklahoma Tax Reduction and Simplification Act, the conservative centerpiece of our pro-jobs agenda. Send this plan to my desk and let working families keep more of their hard-earned money and provide a higher quality of life for all Oklahomans.”

Fallin made the case for her tax cut plan in the annual State of the State address at the Capitol in Oklahoma City today (Monday, February 6). Her address marked the formal opening of the 2012 legislative session, the second regular session of the Fifth-Third Legislature.