Corporate, Personal Income Tax Cuts Sent To Governor
It looks like Oklahomans and Oklahoma businesses will get a tax cut next year.
The Oklahoma Senate passed bills on Thursday to lower all personal income tax bracket rates 0.25% and to reduce the corporate income tax from 6% to 4%. They now go to Gov. Kevin Stitt's desk.
Three Republicans joined all nine Senate Democrats in voting 34–12 against the corporate tax cut in House Bill 2960, including Sen. Dave Rader (R-Tulsa), who said it doesn’t meet three conservative standards he was taught make good tax policy.
"You know, we’re all for tax reform. So, let’s do tax reform instead of doing this one-off that is not accessible to everybody, that does pick a winner and it does hurt the state. It goes 0-for-3," Rader said.
Sen. Brent Howard (R-Altus) said he hasn’t heard any business asking for a tax cut, and large, out-of-state corporations stand to benefit the most.
"Don’t get me wrong, just like the $2,400 stimulus checks, people aren’t going to turn those down. So, they’re going to take it and they’re going to be happy about it, but this is not going to help the average Oklahoman," Howard said.
Senate Appropriations Chair Roger Thompson (R-Okemah) said companies like Amazon, which has several facilities in Oklahoma, are helping the state, and a tax cut would bring more business from similar players.
"So, while these are out-of-state corporations by name, they’re making huge investments in Oklahoma. That’s supplying jobs. That’s raising our quality of life," Thompson said.
A legislative analysis estimates the state will lose around $110 million a year from the corporate tax cut.
On a party-line 37–9 vote, the Senate signed off on House Bill 2962, which cuts personal income tax bracket rates. According to a legislative analysis, that will cost the state almost $240 million a year once it’s fully realized.
Sen. Julia Kirt (D-Oklahoma City) said a large share of that money isn’t going back to those who need it most.
"Close to half the revenue will go to individuals making more than $100,000 a year. Meanwhile, we still have our top tax bracket starting at $7,200," Kirt said.
Kirt also said it was short-sighted for the state to forgo such a large chunk of revenue not tied to the volatility of oil prices. Thompson defended the tax cut as a way to stimulate the economy.
"Whenever that people have more income within their pockets, they’re better to make decisions for their family than the government is to make decisions for their family. Tax cuts increases that activity within our community," Thompson said.
Opponents of both measures have warned if the state gets in a bind like it did three years ago and needs new revenue, it will be difficult to undo them. It takes three-fourths majorities in the House and Senate to raise taxes.