How About An 'Oklahoma Curve'?
The Oklahoma Council of Public Affairs (OCPA) released today the findings of a new research study evaluating the economic benefits of phasing out Oklahoma's personal income tax over a 10-year period.
The release coincided with an appearance in the state by Dr. Arthur Laffer, nationally known economist and author, former member of President Ronald Reagan's Economic Policy Advisory Board, and the acclaimed "Father of Supply-Side Economics."
The OCPA study was conducted in collaboration with the econometrics firm Arduin, Laffer & Moore, of which Dr. Laffer is a co-founder.
One of the report’s key findings is that eliminating Oklahoma's personal income tax without increasing other tax rates would result in the state having the lowest overall tax burden of the lower 48 states and Hawaii.
"It's time for Oklahoma to take a bold step toward sustained prosperity," said Michael Carnuccio, OCPA president.
"Eliminating our personal income tax through a gradual phase-out is the kind of transformational change that will move us from having a better-than-average economic climate to being among the very best states in the nation to do business, create jobs, raise a family and retire."
Oklahoma's tax and fiscal policies in recent years have led to better economic performance than in many other states. But in terms of opportunity and growth, Oklahoma still lags behind most states that boast no personal income tax or have lower tax burdens.
"In the past decade, states without an individual income tax saw 10 times more job growth than the national average and over twice the job growth we experienced in Oklahoma," said Jonathan Small, OCPA's fiscal policy director.
"The reason is simple. In states with no income tax, employers have a stronger incentive to take risk, pursue profit and create jobs. When the free market is allowed to work, individuals are more likely to prosper."
Many public commentators have claimed it is impossible to eliminate Oklahoma's personal income without slashing core government services, raising other tax rates or introducing new forms of taxation. But the new OCPA report provides significant evidence to the contrary.
The report shows by phasing out the individual income tax over a 10-year period, the state's private-sector economy and public-sector revenues are given ample time to adjust, meaning only relatively minimal reductions in non-core areas of state spending would be necessary.
“Oklahoma does not need to raise taxes to cut taxes,” Carnuccio said. “With hundreds of millions of dollars in waste, inefficiency, and non-core spending in state government, there is plenty of revenue to fund education, transportation, public safety and a safety net for the truly needy while returning tax dollars to the many Oklahoma families struggling to make ends meet.”
OCPA has estimated the average Oklahoma family of four would see a savings of more than $1,300 a year if the individual income tax were phased out. The average individual taxpayer would save approximately $1,000 a year.
"That's a pretty nice pay raise for most Oklahomans," said Small.
In September, OCPA released the results of a statewide survey which showed that 65 percent of likely voters would prefer to phase out the personal income tax without raising other tax rates.
The survey also showed, by a more than two-to-one margin, voters would prefer lower taxes, even if it meant state government provided fewer services.
"Oklahomans get it," Carnuccio said. "They understand we can't nickel-and-dime our way to prosperity as a state. They also work hard for their paycheck each month and know they could spend the bulk of that money better than a government bureaucrat.
“Combine Oklahoma’s low cost of living with the lowest tax burden in the continental United States, and you have a recipe for the best economic environment in the country. Not just better, the best.”
Additional details of the new OCPA study are available at the organization's website, www.ocpathink.org.