The Republican-controlled Oklahoma Senate has voted to repeal an economic trigger that would lower the state’s top income tax rate from 5 percent to 4.85 percent.
Passage would essentially mean an increase in state income taxes.
For years, conservative business-friendly lawmakers have tried to eliminate the state income tax through incremental decrease. The next scheduled cut – from 5 percent to 4.85 percent – would be derailed if Senate Bill 170 is approved by the House and signed by Gov. Mary Fallin.
Sen. Roger Thompson, R-Okemah, is the author of Senate Bill 170 which was approved by a wide margin in the Senate.
Thompson and Rep. Earl Sears, R-Bartlesville, are authors of the bill and Sen. Kevin Matthews, D-Tulsa, and Sen. Ron Sharp, R-Shawnee, are co-authors. Sen. Nathan Dahm, R-Broken Arrow, is the only Tulsa area senator who voted against the bill, which passed 39-6.
“I believe with this vote the Senate is saying we need to quit digging—we need to stabilize our income,” Thompson said. “At this point in time, we need to pay our bills and let future legislatures deal with the decision of whether to reduce taxes further.”
Thompson, chair of the Senate Appropriations Subcommittee on Finance, said when the Legislature began cutting income taxes several years ago under then-Governor Brad Henry, the state had a surplus of funds. But after facing revenue shortfalls of $600 million two sessions ago, $1.3 billion last session, and $878 million this year,
Thompson said ending the trigger is the right thing to do.
“It would only take growth in the amount of $97 million to trigger another state income tax cut from 5 percent to 4.85 percent,” Thompson said. “That wouldn’t be very much at all after the shortfalls we’ve seen. For right now, we need to focus on meeting our financial obligations.”
In her state of the state address, Fallin advocated raising sales tax on 164 products and services. That tax increase plan has been strongly opposed by a growing group of conservative Republicans in the House.