Time to repeal the franchise tax
March 4, 2013
The Oklahoma Legislature has taken the first step toward repealing the state’s franchise tax. Last month the House Revenue and Taxation Committee voted 11-1 to dump this $40 million tax, which assesses $1.25 on businesses for every $1,000 in capital invested in our state. In effect, it’s a tax on existence: You exist, so pay up!
Critics who want lots of taxes and lots of government will surely protest that the state is “giving away” $40 million a year that could be better used to … well, what could it be used for? As OCPA’s Jonathan Small has pointed out, much of it is used it ways that don’t pass the Mitch Daniels test. At an OCPA speech in Tulsa and in other venues, Indiana Gov. Mitch Daniels has said: “Never take a dollar from a free citizen through the coercion of taxation without a very legitimate purpose. We have a solemn duty to spend that dollar as carefully as possible because, when we took it, we diminished that person's freedom.”
Left in the private sector, however, that $40 million could be used to hire 800 people earning $50,000 a year. Forty million dollars could pay $10,000 worth of college tuition for 4,000 eager students. It could buy 1,600 cars at an average price of $25,000. It could build 400 homes priced at $100,000 each.
In short, $40 million left in the hands of Oklahoma businesses will boost our economy, while that same $40 million sent to 23rd and Lincoln is a lot less likely to be used wisely.