December Editorial Winner

Editorial

By Mike McCormick

A couple of legislators, one a House member, the other a Senator, have filed bills to gradually phase out and eliminate the state personal and corporate income tax over a decade with the goal of eliminating the tax entirely by 2035.

State Rep. Jay Steagall, R-Yukon, filed House Bill 1009 last week, that would reduce the personal income tax rate by 0.00475 percent annually and the corporate income tax rate by 0.004 percent annually over 10 years. Steagall had filed a nearly identical bill for consideration during the 2024 legislative session.

That is House Bill 3058.

“Recent polls show that Oklahomans overwhelmingly support the elimination of the state income tax, an effort for which I have filed legislation in the past two years and filing once again for the 60th Legislature,” Steagall said. “The state income tax is a clear violation of our own state constitution and I will continue to pursue righting this wrong in the upcoming session.”

State Sen. Michael Bergstrom, R-Adair, filed Senate Bill 1, a tax reform proposal that he says is designed to reduce Oklahoma’s income tax in a responsible and measured way.

Under his proposal, the state’s marginal income tax rate will be reduced 0.25 percentage points across all income brackets. 

He ties future reductions to revenue growth, with the Board of Equalization determining if total revenue has increased by at least $400 million in comparison to the previous fiscal year before the most recent tax cut.

Bergstrom’s plan, he claims, would protect the state’s financial health with safeguards to delay tax cuts during times of revenue failure. If a shortfall were to occur after a tax cut has taken place but before it takes effect, the reduction would be delayed until growth in revenue started again.

One question we have is: what happens if it’s just taken place and gone into effect, then the shortfall occurs?

He notes that additionally, starting in 2035, the $400 million benchmark would adjust every 10 years  to account for inflation, ensuring the plan remains economically viable over time.

In the 2024 session of the Legislature lawmakers eliminated the state sales tax on groceries. The public overwhelmingly favored that as well and that was good.

But another question, for not only Bergstrom and Steagall but all the other legislators, is with that already in place now, how is the revenue the state income tax is now producing going to be replaced?

No one likes to pay state income taxes. But we caution state legislators to examine these proposals closely and answer some of those questions.

The public may favor elimination of the state income tax over the years but the public enjoys a great many services and how well will they enjoy it if some of those begin to disappear unless an additional funding source is found and what might that be?

We’ll be curious to see what happens.