Among the half-dozen ballot questions facing Oklahoma voters in November, State Question 766 is arguably the most significant in economic terms.

If voters agree, the measure would exempt “all intangible personal property from property tax. No person, family or business would pay a tax on intangible property. The change would apply to all tax years beginning on and after January 1, 2013.”

The measure resulted from a collaboration between state Sen. Mike Mazzei of Tulsa and state Rep. David Dank of Oklahoma City. Passage would put in place clear, affirmative protections for businesses and individuals against what would otherwise be major new taxes.

This year’s work, leading to placement of the constitutional amendment before the people, flowed from a process that began in the 2010 legislative session, as legislators grappled with the implications of a 2009 ruling in the case of AT&T v. Oklahoma State Board of Equalization.

The court in that instance interpreted existing state constitutional provisions which explicitly exempt from taxation a variety of business assets. These are items deemed, in Article 10, section 6A of the constitution, “intangibles”—including cash on hand, gold, silver, coins, money on deposit, accounts receivable, promissory notes, and similar things.

Controversy emerged because the justices decided that anything not listed explicitly would be considered “tangible” for purposes of taxation. In a nutshell, that’s the rub.

Concern about intangible taxation brought OCPA and the liberal Oklahoma Policy Institute (OPI) to nearly the same conclusion at hearings held last fall, during the legislative task force’s hearings designed to address unease created in the business community over the ruling’s implications.

Testifying before the Task Force, OCPA president Michael Carnuccio pointed out that no surrounding states levy a tax on intangibles. In fact, according to the Tax Foundation, only 10 states in the whole nation do so.

David Blatt of the Oklahoma Policy Institute said last fall the best solution was a constitutional amendment to restore the “status quo ante,” putting the levy on centrally assessed entities only, that is, larger entities whose property tax assessments are made at the state level.

This year, however, Blatt’s group has offered criticisms of S.Q. 766. In a July 18 blog post, OPI’s Gene Perry argued that a result of the measure’s passage “would be a revenue loss to schools and local governments of about $65 million that would have to be made up for by a combination of budget cuts and hikes in the tax rate on the property that remains taxable.” He said “there are much better way to achieve property tax relief than creating more arbitrary caps and exemptions.”

In a September 11 guest post on the OPI blog, Michelle Cantrell, a tax specialist in Tulsa, contended the measure could cost local governments around $50 million, most of that in public school funding, and an undefined higher amount over time.

The concern is that over the past three decades, in a growing service economy, “intangibles” have become a higher portion of the perceived value of businesses. Pointing to Oregon and Washington state as places that include intangible taxation to one degree or another, Cantrell said the approach proposed in our S.Q. 766 would create “a giant tax loophole for corporations.”

Concerns from conservatives, however, are not theoretical. The logic of the state court decision could lead to significant increases in the size of government and the tax burden on business.

Are some of us worrying too much about theoretical possibilities?

Probably not: at least one county assessor in central Oklahoma (not Leonard Sullivan in Oklahoma County) has been making inquiries to lawyers and tax accountants about the value of goodwill in home sale transactions. In that scenario, the intangible to be taxed could shift from business to the most ubiquitous benchmark of the American dream, a man’s castle.

In the views of one seasoned (admittedly Republican) student of government, with S.Q. 766, “personal pensions, the value of any license (including a teaching certificate), and even ‘goodwill’ could be taxed.” (More on that in a moment.)

In Florida, before intangible taxation was tossed overboard, even the cash value of whole-life insurance policies was subject to the levy.

Supporters of S.Q. 766 include OCPA’s analysts, Chamber of Commerce members, leading businesses, and, unsurprisingly, AT&T. Legislation sending the constitutional measure to the ballot sailed through the state House easily, guided by the all-but-sainted Rep. Dank, on a relatively bipartisan vote, then got locked up a bit in the Senate, where Democrats broke against it.

On this one, there is broad unity on the political “right,” loosely defined, in Oklahoma. There is concern about what failure for the proposition would mean—among the majority of conservative activists, as well as those analysts sometimes deem “Chamber types.”

Speaking of Chamber types, people engaged in commerce worry about taxing the value of items identified by the State Chamber’s Gwendolyn Caldwell in a recent backgrounder: customer lists, relationships, databases, goodwill, employment contracts, patented technology, lease agreements, trademarks/trade names, software, land leases, mineral interests, insurance, and a virtually endless list of other possibilities.

At this point, arguing against S.Q. 766 is the Oklahoma Policy Institute, based in Tulsa, some school superintendents, and defenders of the original decision.

Here’s a personal take on the situation.

For business interests, a tax on intangibles is essentially double taxation. A woman’s business is taxed on profits, not the unrealized value of a name brand. A man who leases mineral rights already pays a tax on income—should he also have to pay a tax on the value of a lease?

And, what about the value of a relationship established by contract?

For that matter, what about the value of a handshake agreement (still the way a lot of Oklahomans do business)? To this day, such deals still benefit both parties. In the end, a successful outcome gets taxed the right way, on actual profits.

I run the Oklahoma bureau (CapitolBeatOK) of a news organization that is part of the Franklin Center, a nationwide nonprofit “think tank” dedicated to strong, independent-minded journalism of the old school, albeit on the Internet rather than in print.

When people quiz me about being in the pioneer generation of the brave new world of nonprofit journalism, I often reply with a quick quip. I tell them that the weekly community newspaper I am part of, The City Sentinel, is a longstanding pioneer of nonprofit journalism, even if it wasn’t intended that way!

In both ventures, I will never get rich, but I do get taxed. I have accumulated, dare I say it, “goodwill.” The “brand name” for both news organizations is valuable, but I don’t know how in the world anyone could determine the taxable value of that—any more than they could put a monetary value on the respect I have for advocates like Carnuccio and Blatt.

Taxes are plenty high on the things that can be assessed and monitored, like real property values and profits. (One measure on this year’s ballot, pushed by Rep. Dank and former state Sen. Jim Reynolds, would limit real property tax increases to 3 percent a year, rather than the current 5 percent.)

Keep it real, and tangible. That ought to be enough for any government.

Patrick McGuigan (M.A. in history, Oklahoma State University) is editor of CapitolBeatOK.com.