Senate hikes taxes to generate income

The full Senate voted to approve a group of bills aimed at raising taxes to offset the budget gap for the 2017 fiscal year.

The finance reform measures will generate more than $250 million in additional taxation that can be appropriated in the 2017 budget as part of a comprehensive effort to address the state’s $1.3 billion shortfall.

The measures passed by the Senate include:

  • SB 1604, which makes the earned income tax credit nonrefundable. Those who owe income taxes could still claim this credit. The amount of the credit will no longer exceed the amount of actual taxes owed. Those who owe no income taxes would no longer be eligible to receive a direct cash payment. This change would generate $28,910,000, with $24,573,500 for the General Revenue Fund (GRF).
  • SB 1606, which eliminates the “double deduction.” Higher income taxpayers who itemize on federal returns may deduct certain state and local taxes paid. This change would require the amount of state and local sales and income taxes deducted at the federal level to be added back to Oklahoma income on state returns.  This higher taxation will only affect tax filers who itemize their deductions.  These taxpayers are typically middle- to high-income earners.  This would generate $97,302,000, of which $83,348,893 would go to the general fund.
  • SB 1582, which places a $25 million annual cap on the total amount of statewide credits manufacturers will be allowed for capital investment or new jobs for tax years 2016 through 2018. This would generate $14 million, $11 million. This and other changes in business credits would generate $160 million in revenue.
  • SB 1605, which eliminates the child care facility credit. This credit is for the facility itself and the owners. This would mean a difference of $129,000, with $110,321 going to GRF.
  • HB 3206, which would authorize OMES to certify any funds remaining in the Cash Flow Reserve Fund in December as available for transfer and appropriation. This measure would yield $125 million.