Culture & the Family

Setting Oklahoma on a path to post-pandemic growth

March 21, 2022

Jonathan Small

COVID rates have plunged in the past several weeks and the worst may be behind us. Now policymakers should adopt significant reforms to allow Oklahoma to grow and thrive in the pandemic’s aftermath.

OCPA has released a study that provides a blueprint. It has three major planks: eliminate the personal income tax, reform our state’s dysfunctional regulatory system, and put parents in charge of education with a universal Education Savings Account.

When it comes to taxation, the old adage holds true: If you want less of something, tax it more. Given that the income tax is a penalty on earnings—from work, investment, and risk taking—that means our state discourages job growth with the income tax. It doesn’t have to be that way.

If policymakers reduce Oklahoma’s income tax to zero and offset that change by broadening the sales tax and making sales tax rate adjustments (if policymakers want a revenue-neutral reform), our estimates show those changes would rapidly increase the state’s GDP by almost 3% and have a positive GDP growth impact of around a quarter-percent per year. Over 10 years’ time, Oklahoma’s GDP would increase by more than $13 billion, or more than 100,000 jobs.

To further turbo-boost growth, policymakers should reform state regulatory systems. Government regulation must be clear, predictable, and stable. Regulations should be based on rules, not amorphous standards, and applied equally to all similarly situated actors.

Oklahoma’s traditional regulatory structure too often fails those tests. Oklahoma has one of the nation’s most burdensome occupational licensing regimes, which discourages growth since occupational licensing often exists to create barriers to entry into a profession, not to prevent specific harms.

At the same time, more than 200 boards and commissions oversee most licenses and industry regulations—and those boards are composed of or dominated by incumbent members of the industry the boards are intended to regulate. A system where foxes guard the henhouse is going to benefit one group: the foxes.

Consolidation of state agencies, boards, and commissions—and placing the management of the reorganized agencies under direct executive control—is indispensable to instituting regulatory reform.

Finally, as I have written often in recent months, education must be reformed to put parents in charge and increase educational opportunities for all children.

A government school monopoly—which is effectively what we have with 90 percent of students attending geographically assigned schools—ties academic opportunity to one’s ZIP code. It does not produce better results.

Only by allowing parents to take a child’s state education funding to any provider, public or private, will accountability be ensured. When a school’s existence requires serving its customers, performance improves.

If lawmakers embrace these reforms, Oklahoma can take its rightful place as a national economic leader.