Oklahoma Governor's tax plan due next week
OKLAHOMA CITY—A plan to overhaul Oklahoma's income tax structure by reducing the state's maximum tax rate to 3.5 percent and eliminating nearly all deductions and exemptions will go to the Legislature next week, Gov. Mary Fallin said Tuesday.
Fallin said House Speaker Kris Steele will introduce the bill in the House.
A pair of separate proposals to reduce Oklahoma's personal income tax passed a Senate committee Tuesday despite worries that resulting cuts would threaten state services.
Sen. Mike Mazzei, R-Tulsa, introduced a bill to cut the top tax rate from 5.25 percent to 4.75 percent over the next two years and offset the lost revenue by eliminating most tax deductions. His bill also would reduce the corporate income tax rate from 6 percent to 5.5 percent and get rid of Oklahoma's franchise tax.
"As these measures move through the legislative process, lawmakers will have ample opportunity for careful consideration and deliberation," Mazzei said.
Another measure by Sen. Clark Jolley of Edmond would cut the top income tax rate to 2.25 percent next year and phase out the income tax completely by 2022. Named after conservative economist Arthur Laffer, that proposal is projected to have an estimated $1.7 billion fiscal impact on the state budget by tax year 2016.
Democrats on the panel voted against both bills.
"The state income tax is one-third of Oklahoma's revenue stream," said Sen. Tom Ivester, D-Sayre, who voted against both bills. "Our current funding levels for those critical services are already inadequate, especially after several years of cuts because of the recession -- ask any teacher, highway patrolman or county health department nurse."
Both measures now head to the Senate floor for a vote.
