Budget & Tax

Oklahoma needs to get moving on tax cuts

Curtis Shelton | June 29, 2023

Oklahoma needs to move quickly if it wants to reap the benefits of being an early mover on tax reform. Oklahoma has long been a relatively low-tax state, but the recent reluctance to continue the reduction in the state’s income tax may result in other states passing us by.

In 2023 eight states reduced their income tax rates. This continues the trend started in 2021, since which time 24 states have cut their income tax rates. While Oklahoma is among those 24, 10 other states that previously had higher income-tax rates than Oklahoma either have cut below Oklahoma’s rate or are on pace to do so with planned rate cuts in the future.

Each state competes against the others just like in a traditional marketplace. And just like in the market, early movers gain an advantage over those who join a trend too late. Think of companies like Netflix and Uber who were able to achieve considerable growth while other companies had to adapt to new ways of doing business.

Currently, states without an income tax have seen significant economic growth compared to the rest of the country and these states continue to attract more and more people. After substantial progress in reducing the state’s penalty on work under governor Brad Henry—the rate fell from 7 percent to 5.25 percent between 2004 and 2012—things have slowed down.

If Oklahoma ever decides to eliminate its penalty on work, all Oklahomans will benefit no matter when it happens. But doing it sooner rather than later would give the state a competitive advantage and leave other states playing catch up.

Curtis Shelton Policy Research Fellow

Curtis Shelton

Policy Research Fellow

Curtis Shelton currently serves as a policy research fellow for OCPA with a focus on fiscal policy. Curtis graduated Oklahoma State University in 2016 with a Bachelors of Arts in Finance. Previously, he served as a summer intern at OCPA and spent time as a staff accountant for Sutherland Global Services.

Loading Next