Tax-cut discussion to continue?

Budget & Tax

Ray Carter | May 26, 2023

Tax-cut discussion to continue?

Ray Carter

Although lawmakers are expected to adjourn from the current budget-focused special session without passing a major tax cut, Gov. Kevin Stitt said he may continue to push for one in the coming weeks.

“I’m considering calling people back for another special session to get a tax cut done,” Stitt said. “You know, when you think about it, if we have $6 billion in savings and we have $1.2 billion in excess revenue above expenses, you shouldn’t just spend all of that money. You should give some of that back to the taxpayer.”

It’s not clear if that approach will result in action.

A day before Stitt made his announcement, Senate President Pro Tempore Greg Treat was asked about the possibility of the governor calling a special session for tax cuts.

“He did that last year,” said Treat, R-Oklahoma City. “It didn’t work out for him, so I don’t anticipate him doing that this year. He hasn’t told me one way or the other on that.”

In 2022, Stitt called a special session on tax cuts. Although the Oklahoma House of Representatives convened and passed several measures, the Senate never took up any proposals.

The governor noted that Oklahoma must compete with other states to attract new businesses and grow existing businesses, and said that competition includes tax rates.

“We’re getting further and further behind,” Stitt said. “Pennsylvania: Their tax rate is 3.07 percent. Michigan—these are Democratic states—Michigan, their tax rate is 4.25 percent. North Carolina is what ours is, 4.75 (percent), but they’ve got a plan right now by 2027 to go to 3.99 percent. That’s North Carolina. Iowa is going to 3.9 percent. Louisiana currently is 4.25 percent. That doesn’t include all of the states that are already at zero percent. South Dakota is at zero. Nevada is at zero. Wyoming is at zero. North Dakota is at 2.9 percent. I could go on and on of how we’re getting further and further behind. I want Oklahoma to be the most business-friendly state in the country.”

During this year’s session, Senate officials have indicated they believe the tax-cut proposals promoted by Stitt in his February State of the State address, when combined with other priorities that advanced this year, including historic levels of school funding, would reduce the state’s recurring revenue below the cost of ongoing budget obligations.

Lawmakers did vote to eliminate the marriage penalty, which previously imposed a higher tax rate on married couples than those filing separately, and eliminated the franchise tax. That will save couples $14.7 million annually and save Oklahoma businesses $55 million per year.

“We tried to look at balancing recurring revenue,” Treat said.

House Speaker Charles McCall, R-Atoka, indicated that his caucus supports additional tax cuts.

“Throughout the past three regular sessions, and multiple special sessions, the House has passed numerous bills that would have provided tax cuts and inflation relief for hardworking Oklahomans that the Senate has never taken action on,” McCall said. “The House believes that with record levels of state savings, now is the right time to deliver this relief to Oklahomans. Unfortunately, our colleagues in the Senate see things differently. The House will continue to support meaningful tax relief for the citizens of Oklahoma moving forward, as we have the past three years.”

Although Stitt called for cutting Oklahoma’s personal income tax rate from 4.75 percent to 3.99 percent in his State of the State address in February, he indicated he may pursue a smaller cut in a special session.

“We didn’t give a quarter of a point back to the people, which is really what I was fighting for,” Stitt said. “With inflation and everything costing more, I really wanted to get that done for Oklahoma.”

Ray Carter Director, Center for Independent Journalism

Ray Carter

Director, Center for Independent Journalism

Ray Carter is the director of OCPA’s Center for Independent Journalism. He has two decades of experience in journalism and communications. He previously served as senior Capitol reporter for The Journal Record, media director for the Oklahoma House of Representatives, and chief editorial writer at The Oklahoman. As a reporter for The Journal Record, Carter received 12 Carl Rogan Awards in four years—including awards for investigative reporting, general news reporting, feature writing, spot news reporting, business reporting, and sports reporting. While at The Oklahoman, he was the recipient of several awards, including first place in the editorial writing category of the Associated Press/Oklahoma News Executives Carl Rogan Memorial News Excellence Competition for an editorial on the history of racism in the Oklahoma legislature.

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