EDMOND —
Registered voters will be able to vote for a tax reduction if they approve State Question 766 on the ballot Nov. 6. The measure would exempt all intangible personal property from ad valorem taxation, according to the ballot.
The ballot states that “Intangible Personal Property is property whose value is not derived from its physical attributes, but rather from what it represents or evidences.”
The ballot states if the measure is approved this property would no longer be taxed for items such as:
• patents, inventions, formulas, designs, and trade secrets;
• licenses, franchise, and contracts;
• land leases, mineral interests, and insurance policies;
• custom computer software; and
• trademarks, trade names and brand names.
SQ 766 is important because intellectual properties should be protected, said state Rep. Randy McDaniel, R-Edmond.
“People need to have the opportunity to invent solutions for the modern world,” McDaniel said. “It is a concern that this could be a very large tax increase without passage of this state question.”
SQ 766 involves client lists, security issues and trade secrets, McDaniel said.
“It’s scary to think how stifling on private business this would be if it does not pass,” said state Sen. Greg Treat, R-Oklahoma City.
Approval of SQ 766 would help the business climate in Oklahoma, Treat said. Unlimited power to tax intangible property makes the state less appealing for business, he said.
Treat pointed out that the Oklahoma Supreme Court decision in Southwestern Bell Tel. Co. v. Okla. State Bd. of Equalization is the reason SQ 766 is on the ballot. Southwestern Bell complained about being taxed on intangible property and the state Supreme Court ruled against the company.
Treat said passage of SQ 766 would right this judicial wrong and close the gap. “I don’t think the Legislature ever planned on intangible property ever being taxed,” he said.
The State Chamber of Oklahoma and business leaders lobbied lawmakers for the issue to be decided on a ballot measure. Business interests feared they would have to pay more than the current $25 across the board tax, known as the BAT tax.
“This tax puts Oklahoma businesses, large and small, at a huge competitive disadvantage,” according to the State Chamber of Oklahoma. “If not addressed this would represent the largest tax increase in Oklahoma history.”
SQ 766 is a collaborative effort of state Sen. Mike Mazzei of Tulsa and state Rep. David Dank of Oklahoma City, both Republicans.
“Certainly I think it presents a unique opportunity, and I support reducing taxes and these in particular,” said state Rep. Randy Grau, R-Edmond.
“Voters have an opportunity to vote themselves a tax cut. There are issues presented all the time where the government offers the opportunity to vote for a bond or tax increase, but not very often do we get to vote for a tax cut,” Grau said.
Grau said one of the largest concerns of the intangible personal property tax going on the books as of Jan. 1 is that it’s unclear how it would be calculated in each county. That could mean that businesses operating in all 77 Oklahoma counties might be taxed on the same intangible personal property differently in each county. Grau described it as a nightmare to try and determine how to apportion out a fair amount of those taxes to counties.
Others disagree that SQ 766 would be beneficial for the state.
The Oklahoma Policy Institute has posted a new blog on SQ 766, written by Tulsa tax specialist Michelle Cantrell. She asserts that SQ 766 is a giant tax break for large corporations.
SQ 766 does not define or limit the definition of intangible property and will cause further litigation, Cantrell added. So the cost to schools, public safety and other local services could grow over time, she said.
“Like most states, Oklahoma determines ad valorem taxation of certain entities, including public service companies, railroads and airlines, at the state level instead of the local level,” Cantrell stated. “To determine the value of these centrally-assessed companies, the Oklahoma Board of Equalization looks at the value of the entire company as a unit, subtracts certain non-taxable items, then determines Oklahoma’s portion of that value before applying tax rates.”
TO LEARN MORE about Oklahoma state questions, go to https://www.sos.ok.gov/gov/proposed_questions.aspx.
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