The Edmond Sun

April 12, 2013

Why income tax cuts cannot wait

By Matt Ball
Special to The Sun

OKLA. CITY — “When government expands, liberty contracts.” So said Ronald Reagan in his farewell address. Oklahomans don’t understand why Washington does not get it. The tax-and-spend course charted by President Obama has amounted to multi-year trillion dollar annual deficits, rising taxes and an ever-expanding regulatory presence in the lives of job creators and families.  Is it any wonder this “recovery” has been the slowest since the Great Depression?

In Oklahoma, we have the opportunity to continue moving in a fundamentally opposite direction from Washington: Empowering economic freedom through lower taxes, smaller government and harnessing free market solutions to solve public policy problems.

One component of this path to prosperity must be a committed effort at the Legislature to focus on reducing our state income tax. As President Obama continues to seek tax increases on individuals and business, it becomes increasingly important for states to demonstrate a commitment to economic growth by reducing taxes in a fiscally responsible manner.

Many have asked, “Why do we need an income tax cut this year?” A reasonable question with a reasonable answer: States with more competitive tax climates have stronger economic growth. Simply put, taxes matter.

Comparing the 10 best tax climate states to the 10 worst shows the dramatic difference. From 2000 to 2010, the 10 best states experienced 135 percent faster personal income growth, 445 percent more new jobs, 152 percent faster economic growth and 299 percent faster population growth. When Oklahoma makes tax policy changes, for better or worse, we immediately affect our competitiveness among the states for jobs and capital investment. As surrounding states resolve to eliminate their income tax, continued inaction risks Oklahoma becoming not just a Texas-Kansas income tax sandwich, but rather, an income tax island.

This session, Gov. Mary Fallin rightly called on House and Senate leaders to send a meaningful income tax reduction to her desk. House Speaker T.W. Shannon and Senate Pro-Tem Brian Bingman authored HB 2032, which would have reduced the income tax to 5 percent in 2014 in a fiscally responsible manner. Last week, this simple, common-sense proposal was scrapped in Senate committee for a puzzling plan that delays any income tax relief until at least 2015.

So why no consensus on this issue? First, legislators must remember the dynamic economic effects of reducing taxes on production. When we decrease the tax burden on what Oklahomans are producing — their income — we increase the amount of that productivity Oklahoma families can spend, save and invest as they see fit.  When government contracts, liberty expands.  

Second, some legislators begin the debate on income tax cuts by asking, “how can we make-up the lost revenue?” Republican legislators would be wise to begin asking “where should we trim state government to allow Oklahomans to keep more of what they earn?” To suggest all of Oklahoma’s agencies, boards, and commissions should remain untouched by oversight is unacceptable. Finally, we must recognize that if Oklahoma is to become a premier hub for job creation in America, we cannot afford to play catch-up, we must boldly lead the way.

The question remains: Will we?

MATT BALL, an Edmond resident, is Oklahoma state director for Americans for Prosperity.