Economy

IRS data suggest Oklahoma’s real growth engine isn’t subsidy schemes—it’s economic freedom

March 23, 2026

Ray Carter

In recent years, the State of Oklahoma has engaged in business-subsidy bidding wars with other states, trying to land so-called “mega” projects. In those competitions, Oklahoma has generally fallen short, despite offering hundreds of millions of dollars in subsidies to individual businesses.

But new data indicate that adjusted gross income in Oklahoma has increased by an amount several times larger than what would have occurred had the state landed one of those “mega” projects.  

That income growth is the result of broad-based policy changes such as income-tax reductions, which made Oklahoma attractive to new residents, and not because of any specific handout to a favored business.

Newly released Internal Revenue Service data for 2022-2023, the latest available, show that Oklahoma experienced an inflow of 85,394 individuals who moved here from other states. Those families brought with them $2.68 billion in adjusted gross income.

That more than offset the loss of 72,805 individuals who moved away from Oklahoma that year, taking $2.42 billion in adjusted gross income with them.

Overall, domestic migration increased Oklahoma’s adjusted gross income by a net of roughly a quarter-billion dollars that year.

Looking slightly further back, from 2019 to 2023, domestic migration boosted Oklahoma’s net adjusted gross income by roughly $1.3 billion total. That’s a far larger sum than what business-subsidy backers projected if the state landed a major plant in recent years.

For example, Oklahoma officials offered Panasonic nearly $700 million in taxpayer subsidies to build a plant here, with those subsidies tied to the promised gradual creation of roughly 3,500 new jobs.

However, Panasonic officials ultimately chose to open the plant in Kansas, which reportedly offered $1.3 billion in subsidies.

A 2022 report from Wichita State University, which was cited in support of Kansas’ lavish incentives, estimated that adding a battery equipment manufacturing company would have a total employment impact of 8,051 jobs with over $505 million in yearly labor income—a figure that is less than half the income growth Oklahoma has now generated via domestic migration.

It is not clear if the Kansas plant will ever achieve the job and income projections used to sell it. As of February 2026, the Kansas Panasonic plant employed only 1,400 and had not yet reached 50 percent of production capacity.

Notably, IRS data show that Oklahoma and Kansas are on opposite trajectories, despite Kansas having “won” the Panasonic bidding war.

From 2019 to 2023, domestic migration to Oklahoma boosted net adjusted gross income in the state by more than $1.3 billion, according to data released by the Internal Revenue Service.

At the same time, the state of Kansas lost $1.9 billion in adjusted gross income as more people moved out of the state than into it.

A 2024 analysis by an official with the Committee to Unleash Prosperity found that Oklahoma generated more jobs than 34 states from February 2020 to September 2024, ranking 16th-best overall. Kansas placed 14 spots lower.

Oklahoma’s growth in domestic migration and associated income, as well as job creation in general, has occurred as state officials have cut Oklahoma’s income tax from 5 percent to 4.5 percent, authorized a statewide school choice program that allows all families to pursue private education, and leaned into the state’s cultural conservatism, such as banning men from women’s athletics and school bathrooms, among other conservative policies.

Matthew Mitchell, a senior affiliated scholar at the Mercatus Center at George Mason University and senior fellow at the Fraser Institute, said it isn’t shocking that Oklahoma has quietly grown its economy in ways that significantly exceed the projections associated with highly publicized business-subsidy efforts.

“You are highlighting what I would call the two major strategies for economic growth,” Mitchell said. “Strategy one is an engineer’s mindset: pick winners and losers, and attempt to direct growth by favoring some firms or industries over others. Strategy two is a gardener’s mindset: establish good conditions for growth (namely, economic freedom), step back, and let people make their own economic choices.

“There are lots of reasons to believe that the gardener’s approach is a better strategy,” Mitchell continued. “It harnesses the local knowledge of entrepreneurs and consumers. It incentivizes prudent risk-taking. It doesn’t discourage economic activity through high taxes. (You do less economic damage with a low tax rate on everyone than you do with a very low tax rate for favored firms and a higher one for disfavored firms).”

The Fraser Institute’s Economic Freedom of North America index, which measures the degree to which states permit people to make their own economic choices, finds that “states with greater economic freedom tend to grow faster and attract more residents,” he noted.

The 2025 version of that report ranked Oklahoma among the top five states for all-government economic freedom.

“People in these states are more entrepreneurial, more tolerant, happier, less likely to be unhoused, and even more philanthropic,” Mitchell said. “As a relatively free state that has been gaining freedom, Oklahoma fits the general pattern. If anything, it underperforms the trend, which may mean it is about to catch up.”

Several reports have indicated that a strong trend of domestic migration has continued in the years following those covered by the IRS data, likely contributing to continued strong growth in Oklahoma’s adjusted gross income.

The most recent example came in a report from Hire a Helper, a moving company, that ranked Oklahoma among the top 10 states for net domestic migration in 2025.

If IRS data show that domestic migration to Oklahoma in 2024 and 2025 had comparable impacts on gross income that the migration from 2020 to 2023 had, Oklahoma’s adjusted gross income may now easily be $1.5 billion higher than it was before COVID.

That defies the predictions of those who advocated for the Panasonic subsidies and opposed broader tax-cutting measures that lowered the tax burden of all Oklahomans in recent years.

In 2023, state Rep. Mickey Dollens, an Oklahoma City Democrat who supported the Panasonic subsidies but has opposed income-tax cuts, blamed Oklahoma’s conservative political climate for the failure to lure the company here.

Dollens told Oklahoma City’s CBS-affiliate News 9, “You can incentivize a company with nearly $1 billion to move here, but they’re still turning us down, and in my opinion, it’s because of the extreme conservative social issues and policies that continue to get passed in the state.”

For some politicians, the success of broad-based conservative policy over central-planning-style business subsidy efforts is not a benefit, Mitchell noted.

“The only problem with the gardener’s approach is that it doesn’t give a politician an opportunity to stand in front of a new factory and cut a ribbon or to stand in front of a new project with a golden shovel and break ground,” Mitchell said. “Instead, it empowers thousands of entrepreneurs and millions of consumers to direct economic development. It provides no photo opportunity, but lots of opportunity.”

[Photo credit: yu_photo - stock.adobe.com]