This week, officials with Devon Energy and Coterra Energy announced the two companies are merging. The combined company will be headquartered in Houston, not Oklahoma City.

Senate Democratic Leader Julia Kirt of Oklahoma City appeared baffled by the decision to relocate.

“Anytime we lose a corporate entity from Oklahoma, that’s a concern,” Kirt said. “And I hope that we’re going to assess why they chose Houston for their headquarters.”

State Sen. Dusty Deevers, R-Elgin, said the reason for the company’s move is obvious: Oklahoma still taxes income while Texas does not.

“Oklahomans shouldn’t have to cross a state line to get a 4.5% raise. The income tax must be repealed,” Deevers wrote in a post on X. “One of the biggest considerations in selecting a headquarters is taxation. Devon Energy’s recent decision to move their headquarters to Texas, a state with no income tax, should create a sense of urgency for the Oklahoma legislature to stop wage-theft.”

That tax rates impact business decisions has long been obvious.

An October 2022 report by the Stanford Institute for Economic Policy Research, “How Do Tax Policies Affect Individuals and Businesses?” noted, “People tend to leave high-tax areas and move to areas where taxes are lower.”

In 2016, the report noted, 24 of the 25 highest-tax states had net out-migration, while 17 of the lowest-tax states had net in-migration.

In recent years, Oklahoma has enjoyed strong domestic migration as people from other states have moved here, repeatedly ranking in the top 10 or 15 states for net domestic migration.

Oklahoma’s population gains have often come as people have left higher-tax states to move to Oklahoma. But even as those individuals have moved here, Oklahoma has often lost population, particularly higher-income individuals, to states with no income tax.

Oklahoma policymakers have worked to reduce the state’s competitive disadvantage by lowering the personal income tax and putting it on a path to full repeal. Under legislation signed into law last year, a portion of future revenue growth is earmarked for tax reduction. Over time that will allow Oklahoma to chip away at the personal income tax until it is eliminated.

Gov. Kevin Stitt highlighted that plan during this year’s State of the State address, saying, “Last year, with your partnership, we delivered one of our greatest budget reform wins in history: the Path to Zero income tax—effectively capping spending in statute to protect taxpayers.”

However, stark differences remain between Democrats and Republicans.

Despite public worrying about the loss of Devon and calling for the state to “continue to diversify” its economy so the loss of a single corporation will be less devastating, Kirt has also filed legislation that would lock in current income-tax rates.

Senate Bill 1302, by Kirt, would repeal Oklahoma’s “path to zero” law.

On the other hand, Deevers said the “path to zero” plan is progress but noted it will take years to fully repeal the personal income tax. In the meantime, he warned the state may see “many more missed opportunities” like the loss of Devon.

He has filed Senate Bill 2156, which would immediately repeal the state’s 4.5-percent personal income tax.

“I filed legislation to abolish the income tax last year,” Deevers wrote, “and again this year.”