Did recent income-tax cuts result in a deficit for Oklahoma’s state government? Let’s look at the evidence.

Over the last 20 years, Oklahoma state government revenue has grown by 51 percent when accounting for population growth and inflation. At the same time, the state reduced its income tax by 32 percent, from a top rate of 7 percent to 4.75 percent.

Sources: Oklahoma Annual Comprehensive Financial Reports; U.S. Bureau of Labor Statistics,

CPI Inflation Calculator; Oklahoma Tax Commission Annual Reports

All this revenue growth occurred with a steadily decreasing income tax rate. In fact, the only times Oklahoma saw a decline in revenue growth were: from 2007 to 2010, during The Great Recession; in 2016, after OPEC flooded the oil market resulting in oil prices dropping from $100 a barrel to nearly $30; and 2020, when Covid-19 temporarily brought the world economy to a halt.

No other time after Oklahoma cut its income-tax rates did the state government have a decline in revenue.

Even with these tax cuts, the state government’s revenue growth has been outpacing the income growth of the families who support it. Real median household income in Oklahoma has only grown 19 percent since 2003.Sources: Oklahoma Annual Comprehensive Financial Reports; U.S. Bureau of

Labor Statistics, CPI Inflation Calculator; U.S. Census Bureau, Real Median Household Income in

Oklahoma, retrieved from FRED, Federal Reserve Bank of St. Louis

Oklahoma isn’t the only state with income-tax experience. Since 2021, there have been 27 states that enacted a tax cut. Those tax-cutting states have seen their government revenues grow faster than the states that didn’t. Growing government is never the goal of a tax cut, of course, but the idea that tax cuts are going to starve the state government is simply not true.

Former Governor Brad Henry, who oversaw some of the largest income-tax cuts in state history, was correct when he said the goal was to ensure Oklahomans “have more of their hard-earned dollars for savings and investment” and “to incentivize investment in and growth of Oklahoma companies and encourage the relocation of out-of-state corporate headquarters to Oklahoma.”