The Edmond Sun


January 11, 2013

The case against another income tax cut

EDMOND — In the next three weeks Gov. Mary Fallin will release her proposed FY 2014 state budget — a budget that likely will renew her call for legislators to pass a significant cut in Oklahoma’s individual income tax. While cutting the state’s income tax likely will be very popular with key legislators, the more interesting policy question is whether enacting further income tax cuts is the best way to allocate limited state revenues.

Every penny that the Legislature allocates to fund state income tax cuts is one less penny that they can use to fund other budget needs. So, more income tax cuts necessarily mean less spending for education, less spending for roads, less spending for prisons and less money for other types of tax cuts. So when considering new tax cuts, legislators need to consider not just whether the cuts would generate benefits, but whether they will generate the most benefits of all the other options. When one examines the issue through this lens, there are a number of reasons why cutting the state’s income tax should not be the Legislature’s highest priority.

One reason for this is that Oklahoma’s tax burden already is well below the national average. According to data compiled by the U.S. Census Bureau, in 2010 (the last year for which full data is available) Oklahoma’s state and local tax burden (state and local tax collections divided by state personal income) is 8.53 percent, which ranks as the 47th highest out of 50 states — only Alaska, Tennessee and South Dakota rank lower. Oklahoma’s individual income tax is not comparatively high either. According to the same Census Bureau data, Oklahomans paid only 1.67 percent of their personal income in individual income taxes in 2010 — a tax burden that ranks 35th out of the 50 states. Hence, our state individual income tax is clearly not abnormally high compared to the other states.

With this comparatively low level of taxes paid by Oklahomans, we have a comparatively low level of government services received by Oklahomans as well. According to a different set of Census Bureau data, Oklahoma ranks 47th nationally in per-pupil K-12 education expenditures. Even when one adjusts for Oklahoma’s comparatively low income, Oklahoma ranks 33rd out of the 50 states. Investing less in our children’s education is not the ideal way to develop the workforce for a dynamic 21st century economy.

And it’s not just education that suffers from insufficient funding. Oklahoma’s roads and bridges routinely rank among the nation’s worst. Oklahomans’ health, including mental health, routinely ranks among the nation’s poorest. And perhaps the most fitting example of what happens when state leaders fail to make sufficient investments for the future — we have a state Capitol building that is literally crumbling apart.

More state income tax cuts make it more difficult for policymakers to address these other needs — needs that to me are much more pressing, much more concerning, much more troublesome.

In the past some tax cut supporters have dismissed similar claims by arguing that further cuts in the state’s income tax will stimulate faster economic growth, enabling the state to spend even more money on education, health care, roads and prisons. However, the data from states that lack an individual income tax do not support these claims. Since 2000 Oklahoma’s per-capita personal income has outpaced seven of the nine states that lack a personal income tax (source: U.S. Census Bureau). Furthermore, Oklahoma’s median household income — arguably the most relevant economic statistic regarding the well-being of the typical household — has grown faster than the median household income in all nine states that lack a personal income tax. In short, these two key economic indicators (which are confirmed by decades of economic research on the subject) show that cutting state income taxes is not a panacea to prosperity.

The path to prosperity is paved with investments for the future. Let’s hope that this legislative session our leaders recognize that our state’s biggest obstacle in our path is that we haven’t invested enough.


MICKEY HEPNER is the dean of the College of Business Administration at the University of Central Oklahoma. Hepner serves on the Executive Committee of the Board of Directors for The Oklahoma Academy.

Text Only
  • Instead of mothballing Navy ships, give them to our allies

    A bitter debate has raged in the Pentagon for several months about the wisdom of taking the nuclear aircraft carrier George Washington out of service to save money. The Washington, at 24 years old a relatively young vessel, is due for a costly refit, a routine procedure that all of the 11 large carriers in service undergo regularly.

    April 18, 2014

  • The pessimist’s guide to grizzly bears and Earth Day

    This coming Friday, to “celebrate Earth Day,” the Walt Disney Co. will release one of those cutesy, fun-for-all-ages, nature documentaries. “Bears” is about grizzly bears.
    The trailer says, “From DisneyNature comes a story that all parents share. About the love, the joy, the struggle and the strength it takes to raise a family.”
    Talk about your misguided “Hollywood values.” I previously have acknowledged a morbid, unreasonable fear of grizzly bears, stemming from a youth misspent reading grisly grizzly-attack articles in Readers Digest. This fear is only morbid and unreasonable because I live about 1,500 miles from the nearest wild grizzly bear. Still. ...

    April 16, 2014

  • Digging out of the CIA-Senate quagmire

    Last week, the Senate Intelligence Committee, led by Sen. Dianne Feinstein, D-Calif., voted to declassify parts of its report on the CIA’s rendition, detention and interrogation program. The White House, the CIA and the Senate still have to negotiate which portions of the report will be redacted before it is made public. But this is an important step in resolving the ugly dispute that has erupted between the intelligence committee and the intelligence agency.
    The dispute presents two very serious questions. Was the program consistent with American values and did it produce valuable intelligence? And is effective congressional oversight of secret activities possible in our democracy?

    April 15, 2014

  • Los Angeles Times: Congress extend jobless benefits again

    How’s this for irony: Having allowed federal unemployment benefits to run out in December, some lawmakers are balking at a bill to renew them retroactively because it might be hard to figure out who should receive them. Congress made this task far harder than it should have been, but the technical challenges aren’t insurmountable. Lawmakers should restore the benefits now and leave them in place until the unemployment rate reaches a more reasonable level.

    April 14, 2014

  • Many nations invested in Israel

    Former Israeli Ambassador to the United States Yoram Ettinger recently spoke to a gathering at the Chabad Center for Jewish Life and Learning in Oklahoma City. The event began with a presentation by Rabbi Ovadia Goldman, who told the attendee that the  upcoming Jewish holiday of Passover was an occasion for them to embrace the children of God, which is all of humanity.

    April 14, 2014

  • Coming soon: More ways to get to know your doctor

    Last week, the federal government released a massive database capable of providing patients with much more information about their doctors.
    The Centers for Medicare and Medicaid Services, the government agency that runs Medicare, is posting on its website detailed information about how many visits and procedures individual health professionals billed the program for in 2012, and how much they were paid.
    This new trove of data, which covers 880,000 health professionals, adds to a growing body of information available to patients who don’t want to leave choosing a doctor to chance. But to put that information to good use, consumers need to be aware of what is available, what’s missing and how to interpret it.

    April 14, 2014

  • HEY HINK: Hateful bullies attempt to muffle free speech

    Hopefully we agree it should be a fundamental right to voice criticism of any religion you wish. And you should have the right to sing the praises of any religion you choose. If criticism of religion is unjust, feel free to make your best argument to prove it. If criticism is just, don’t be afraid to acknowledge and embrace it. If songs of praise are merited, feel free to join in. If not, feel free to ignore them. But no American should participate in curbing free speech just because expression of religious views makes someone uncomfortable.

    April 11, 2014

  • Putting Oklahoma parents in charge

    Oklahoma’s public schools serve many children very well. Still, for various reasons, some students’ needs are better met in private schools, in virtual schools or elsewhere. That is why two state lawmakers have introduced legislation to give parents debit cards, literally, to shop for the educational services that work best for their children.

    April 11, 2014

  • Israelis, Palestinians are losing their chance

    Developments in the Middle East suggest that prospects of success for the Israeli-Palestinian talks, to which Secretary of State John Kerry has devoted countless hours and trips, are weakening.

    April 11, 2014

  • Teens might trade naked selfies for mugshots

    Will teenagers ever learn? You think yours will. Maybe so. But it's likely that was also the hope of the parents of children who were so shamed by nude photos of themselves that went south - how else can they go - that they killed themselves.

    April 11, 2014


Do you agree with a state budget proposal that takes some funds away from road and bridge projects to ramp up education funding by $29.85 million per year until schools are receiving $600 million more a year than they are now? In years in which 1 percent revenue growth does not occur in the general fund, the transfer would not take place.

     View Results