NORMAN — For years, Republican leaders have pointed to Texas and its lack of a state income tax as an example of how Oklahoma ought to be financing its government services. Our neighbors to the south have higher property taxes, dedicated oil royalties and other taxes and fees that make up for the lack of a state income tax.
Now, Oklahoma’s governor says her legacy may be elimination of the state’s income tax. It’s a long-term goal that she outlined at a Town Hall meeting in Lawton this week.
“It’s not something you can do next year,” the Associated Press quoted Gov. Fallin as telling the Lawton guests. “You have to have money to operate state services. We want to find the best way to fund essential services.”
Lawmakers need to look long-term and study some alternatives before making such a leap. Our relatively low tax rate was dropped this year from 5.5 percent to 5.25 percent. The state’s tax revenue has risen over the past 15 months compared to the year before. But it’s still way below where it was before the crash in 2008.
When it rises by more than four percent, it triggers an automatic quarter-percent rate reduction. The move is expected to reduce state revenues in the income tax category in 2012 by $120 million.
Former Gov. Frank Keating, who moved out of state after leaving office in 2003, wanted to jettison the income tax, too. He wanted to replace the lost tax revenue with a 5.9 percent state sales tax on services, an idea opposed by businesses, lawyers, accountants and doctors.
Economic development experts will tell you that tax rates are just one gauge companies use when locating or expanding in a state. Quality of life, educational opportunities, an available workforce and transportation are all factors just as important to site searches. A state that starves its schools, puts off road and bridge repair and new construction and ignores and shutters state parks and lakes won’t be competitive for long.
