Budget & Tax, Good Government

Stitt: Time to cut taxes is now

January 19, 2024

Ray Carter

For most of two years and across three special legislative sessions, Gov. Kevin Stitt has urged lawmakers to reduce Oklahoma’s personal income tax—not only to fuel greater economic growth but also to raise Oklahomans’ take-home pay during a time of historic inflation.

“If you don’t cut taxes when revenue is up, I just don’t know when you do it,” Stitt said.

In an interview with the Oklahoma Council of Public Affairs, Stitt said Oklahomans deserve a tax cut and they deserve to see how their legislators vote on the issue.

The third special session on taxes is scheduled to begin on Jan. 29. The governor has urged legislators to cut the personal income tax from 4.75 percent to 4.5 percent.

Little came of the two prior special sessions due to Senate inaction.

“The House has passed them every single time, and the Senate just keeps kind of delaying and saying they’re ‘studying’ it,” Stitt said. “But we need to give Oklahomans a pay increase. Inflation is hurting everybody. Their buying power has gone down. We can absolutely afford it. We don’t need to just keep growing government. When we have excess revenue, we need to give it back to the taxpayers.”

When lawmakers convened in June 2022 in the first of the three special sessions focused on tax cuts, House leadership responded by filing numerous tax-cut measures, but Senate leaders declined to vote on the issue and instead announced the creation of a task force to study taxes.

That task force has held no public meetings and produced no plan of action in the nearly 19 months that have since passed.

When lawmakers convened in October 2023 for the second special session on tax cuts, House lawmakers quickly advanced several proposals, but members of the Senate voted to immediately adjourn rather than debate tax cuts. Senators took no roll call on the adjournment motion, preventing citizens from learning how their lawmakers voted.

Several members of the Senate subsequently expressed their disagreement with the decision to adjourn without voting on tax cuts or filed their own tax-cut bills for the pending regular session.

When Stitt speaks to voters, he consistently gets a strong response to his call to cut taxes.

“They’re very, very supportive,” Stitt said. “We’re a representative form of government, and so we’re supposed to elect people that understand this. And I think, as a general rule, people know that more government programs are not the answer and growing government is not the answer.”

A recent poll showed that Oklahomans overwhelmingly support cutting the state income tax and gradually eliminating it.

According to the survey, conducted by WPA Intelligence (WPAi) on behalf of the Oklahoma Council of Public Affairs (OCPA) and Americans for Prosperity–Oklahoma (AFP), 65 percent of Oklahoma voters support cutting the state income tax, while only 22 percent oppose income-tax cuts.

The survey also found that 67 percent of voters support the gradual elimination of Oklahoma’s income tax.

Oklahoma state tax collections remain strong, and state savings have reached a historic high.

According to the state’s first “budget stress” test, conducted and recently released by the Legislative Office of Fiscal Transparency (LOFT), Oklahoma state government would require $6.14 billion in savings to cover all associated downfalls over a five-year period if an economic event comparable to the “Great Recession” of 2008 to 2010 were soon to occur.

But that same report showed Oklahoma has more than $8.9 billion in total savings that could be tapped today, after accounting for all funds.

LOFT’s estimates assumed a strong rate of spending growth and represented, in many ways, a worse-case scenario.

When officials in the governor’s office reviewed past downturns, Stitt noted they found that $3.7 billion in savings was the most that would have been required to weather those events without spending cuts or tax increases.

Today, he noted Oklahoma is well poised to manage future economic downturns without spending cuts or tax increases, and the state can easily afford to cut the income tax today.

Stitt said policymakers can choose one of two paths. One path will make Oklahoma a state where people keep more of their own money and have a small, efficient government. The other path will see ever-greater government spending, lower take-home pay and no certainty of citizen benefit from government growth.

“Florida has 21 million people. New York has 19.8 (million)—so basically the same size,” Stitt said. “New York has a 9-percent income tax; Florida has zero. Florida’s budget is $115 billion. New York’s budget is $233 billion—it’s double. The point is government is going to spend whatever money you give them.”

Cutting taxes “lowers and slows the growth of government,” in addition to providing fuel for economic growth and raising citizens’ take-home pay, Stitt noted.

Stitt believes most Oklahomans would prefer to follow the Florida model, especially given the results. Florida has no income tax, a booming state population, and a strong economy. New York has maintained high taxes to fund more government programs and is among the states shedding the most citizens and jobs, according to U.S. Census figures.

The recent budget “stress test” report by LOFT also noted that Oklahoma state government spending has increased at a significant pace in recent years.

“In the past decade State appropriations have increased along with total revenues,” the LOFT report noted. “In FY14, appropriations totaled $7.1 billion and in FY24, appropriations totaled $10.7 billion, a 50.4 percent increase over the ten years.”

In contrast, cutting the state income tax to 4.5 percent would save Oklahomans about $240 million per year, just a fraction of the total increase in government spending that has occurred in the last decade.

Stitt said House leaders remain supportive of the tax cut and will likely take up the issue quickly on Jan. 29.

“They’re going to pass it on day one,” Stitt said, “and we’ll see if the Senate is going to adhere to the call and put it up for a vote.”