Letter to editor, Income tax

News Managing Editor Kristi Hayes
Ponca City News
Letter to the Editor

Dear Madame:

Here are some numbers and resources to consult concerning the income tax discussion. First, the legislature and governor are not making broad assumptions in asserting that personal income taxes (PIT) discourage job creation and the economy. In the last fifty years, eleven states have instituted a progressive income tax (CT,NJ,OH,RI,PA,ME,IL,NB,MI,IN,WV). Compared to the time prior to the introduction of their tax, every one of those eleven states has declined in their share of the US economy.
The nine no-PIT states had jobs growth the last ten years in a range from -0.7% to 15.2% while the nine heaviest-PIT states had a range of -9.3% to 5.7%. However, Hawaii (tourism) and Maryland (federal jobs) were the only two states among the heavy taxers with any positive job growth. New Hampshire and Tennessee were the only two states with negative job growth among the no-PIT states.
Anyone who tells you there is no correlation between jobs and taxes isn’t consulting the data. The correlation is enormous. That’s why several of Oklahoma’s neighbors are also lowering income taxes (“Heartland Tax Rebellion” Wall Street Journal, Feb. 7) Concerning consistency of state services, the no-PIT states have experienced average year-to-year revenue shortfalls of 0.5% vs. 4.6% for the nine heaviest-PIT states. People who have lost jobs vote with their feet. The 9 no-PIT states have averaged net in-migration of 3.05% over the last decade. Those 9 heavies have net out-migration of 2.48%. All these statistics are available from Oklahoma Council of Public Affairs, an independent, non-profit, policy ‘think tank’.
Readers should remember that it was originally one of Oklahoma’s independent commissions, the OK Tax Commission which recommended that roughly 90% of exemptions and loopholes be closed. This, they reasoned, OK could immediately lower the maximum tax rate from 5.25% to 3.0% and simplify returns. The governor’s plan is 3.5%, is revenue neutral and does not depend on cuts. This was recommended by a bipartisan group that included House District 37’s Rep. Steve Vaughan. Vaughan has been in the forefront of prudence insisting that the State needs to limit its claim on sales taxes so that cities and counties will not be crowded from future revenues. Yet he is a supporter of Gov. Fallin’s plan. He recently said of tax reform, “There is indeed a small revenue risk involved. But if no one will assume any risk, then no one would have lined up on the Kansas border in 1893.”