Taxation level in Oklahoma is average

As the April 15 income tax filing deadline nears, Oklahoma is right in the middle when it comes to judging overall taxation levels.

Oklahoma ranks 25th among the 50 states and District of Columbia in WalletHub’s 2017 Taxpayer Survey.

The good news is that Oklahoma is No. 3 in lowest gasoline prices at the pump. Alaska is No. 1 and South Carolina is No. 2. Pennsylvania is No. 51.

Unlike Oklahoma, 35 states have no state sales tax on groceries. Missouri has the highest cigarette taxes and New York has the lowest cigarette taxes.

Forty-three states levy individual income taxes. Forty-one tax wage and salary income, while two states, New Hampshire and Tennessee tax dividend and interest. Seven states do not levy income taxes.

Of the states which tax wages, eight have single-rate tax structures, with one rate applied to all taxable income. Two states, California and Missouri each have 10 tax brackets. Marginal tax rates go from 2.9 percent in North Dakota to 13.3 percent in California. In some states, tax brackets are clustered in a limited income grouping. Missouri taxpayers attain the state’s highest bracket at $9,072 while in other states such as New Jersey, the top marginal tax rate applies at $500,000 (Tax Foundation, 2017).

Oklahoma has the 27th highest state income tax rate (5 percent).

The report suggests that if state lawmakers want to continue growing government, they must raise taxes or borrow money, especially in the light of reduced revenues, such as in Oklahoma. Since the drop of the price of a barrel of oil, Oklahoma’s Legislature has borrowed hundreds of millions of dollars to supplement the cost of budget shortfalls.

“With higher state and local costs and expenses, the real question is: to tax or to borrow (or both)?” Said, Elizabeth Jane Beckett-Camarata, senior lecturer in Public Administration at Pennsylvania State University. “Since the 2008 financial crisis, overall we see greater reduction in some government services, increased state and local government borrowing, especially long-term borrowing, and even more use of complicated debt instruments such as derivatives and/or increased use of user fees to fund government services. Following the 2008 financial crisis, we have also seen greater population and demographics shifts and change in certain parts of the country with many single industry towns and villages becoming less viable in the changing economy.”

Research has show that many individuals are not aware of basic tax information, such as the rates of state (and/or local) income tax and local property tax millage. Levels of taxation affect the growth of cities and states and can help retain residents. Different people should pay varying amounts of tax based on where they live and what they use.

“The decision of the location of taxation depends on the nature of the purpose of the particular tax policy,” said Sarah E. Larson, assistant professor in the Department of Public Administration at University of Central Florida in Orlando. “For example, an individual driving on a toll road during a daily commute to work — the individual should be subject to the tax per use of the road to get to work. The individual is receiving a direct benefit from the toll or taxation of the road, through improved road quality, increased signage, or other factors that improve the quality of the road for the consumer.

“In contrast, an individual should be taxed for direct services (trash collection, snow removal, lamp posts, etc.) in the location he/she receives those services, which is often where the individual lives. As the individual has a direct benefit in on time trash collection, clean roads after snow storms, and lighting on the block of his/her home, that taxation should be collected at the location of living.”

Tax Survey

What we’d rather be doing than taxes…

  • 72 percent – Laundry
  • 54 percent – Cut the grass
  • 53 percent – Teach kids how to budget
  • 45 percent – Cook Thanksgiving dinner for in-laws
  • 40 percent – Change a diaper
  • 39 percent – Paint your house
  • 30 percent – Talk to kids about birds and bees
  • 30 percent – Fold 100 fitted sheets
  • 24 percent – Miss a connecting flight
  • 12 percent – Spend a night in jail
  • 9 percent – Break your arm

Biggest tax day fears…

  • 32 percent – Identity theft
  • 30 percent – Making a math mistake
  • 20 percent – Not having enough money to pay
  • 18 percent – Getting audited

Deficit, refund or just right?

  • 48 percent – Expect a big refund
  • 38 percent – Don’t owe, no refund
  • 14 percent – Expect to owe a lot

My tax rate is…

  • 60 percent – Too high
  • 35 percent – Just right
  • 5 percent – Too low

Accountants are…

  • 50 percent – Sometimes useful
  • 24 percent – A good deal
  • 21 percent – Overpriced
  • 5 percent – A scam