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Oklahoma AG Says Stimulus Bill Could Threaten Tax Cuts

Oklahoma Watch

OKLAHOMA CITY (AP) — A provision of the latest federal stimulus package could threaten a series of state tax cut bills moving through the Legislature, Attorney General Mike Hunter said Tuesday.

Hunter, a Republican, said a provision in the American Rescue Plan Act of 2021 passed by Congress by party-line votes prohibits states from cutting taxes until 2024 if they get funds from the $1.9 trillion package.

“The federal stimulus bill might prohibit Oklahoma from providing this economic relief without losing its share of federal funding to high-tax states,” Hunter said in a statement. “From a broader perspective, the problem my colleagues and I have with this language is that it is unconstitutional.”

Hunter joined 21 other state attorneys general in a letter to Treasury Secretary Janet Yellen seeking clarification on the issue.

Last week, the Oklahoma House passed a series of bills to reduce the corporate and individual income tax rate and restore the earned-income tax credit’s refundability. Oklahoma Tax Commission estimates show the two bills combined would cost the state an estimated $100 million next year and more than $280 million the following year. The fiscal impact would increase as the corporate income tax is phased out.

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