(Will Oklahoma progressives get shut out of the political debate this legislative session? What type of progressive political agenda, if any, could be successful? In posts this week, DocHoc is giving his preview of the 2012 Oklahoma Legislature.)
Let me start with the caveat that the record is clear that I do NOT support any cut to the state income tax right now because such a cut, even if it’s relatively small, could lower education and social-program funding.
With recent state budget cuts, that’s the last thing that needs to happen in Oklahoma right now.
Having written that, I do think progressives here should take a close look at whether to make opposing proposed income tax cut proposals their top priority this upcoming legislative session, which begins Feb. 6. This is not, of course, to imply progressives or other stakeholders should surrender on the issue; it merely means there should be an extended discussion about legislative priorities among progressives, though I sense that is unlikely to happen.
First, let’s look at the overview of recent tax policy. Conservatives here have talked about eliminating the state income tax in Oklahoma for years. Gov. Frank Keating, who served from 1995 to 2003, started the modern debate over the issue, and worked to reduce the income tax rate here during his term. Since then the top income tax rate has been lowered from 6.65 percent to 5.25 percent. The tax cuts have overwhelmingly benefited the wealthiest Oklahomans.
Emboldened by massive majorities in the Oklahoma House and Senate, Republicans have recently increased their calls for reducing and/or eliminating the income tax. Recently, a task force created by Gov. Mary Fallin recommended lowering the income tax rate from 5.25 to 4.75 percent over two years, and a bill has been introduced in the legislature that would immediately lower the rate to 2.25 percent and then eliminate it altogether over several more years. The measure is co-sponsored by 23 members in the House. Fallin, of course, is clearly on record favoring an income tax cut. She says she will release her plan Monday when the legislative convenes.
All the proposed tax cuts so far at least implicitly argue that future revenue growth supposedly created by an income tax cut-under GOP mythology all tax cuts create huge economic windfalls-would prevent a major decline in government revenue. Given Oklahoma’s up-and-down economic cycles and basic taxation history, this seems highly unlikely. The income tax produces about a third of Oklahoma’s revenues. Even the smallest proposed cut with supposed offsets, coupled with even a small economic downturn, would likely reduce funding for essential government services, including education. What’s more, given strict Oklahoma laws inhibiting tax increases, any tax cut has to be considered permanent.
That’s the basic outline. The Oklahoma Policy Institute (OK Policy), a think tank based in Tulsa, presents a thorough and compelling case against an income tax cut here, and exposes the myths in the conservative tax-cut rhetoric, which specifically points to Texas, a non-income tax state, as a model for Oklahoma. Again, for the record, in November, I argued:
The so-called “Texas Miracle” has been debunked by noted economist Paul Krugman, a New York Times columnist, who pointed out Texas’ relatively high unemployment rate, which was reported at 8.5 percent in August. By contrast, Oklahoma’s unemployment rate stood at 5.6 percent in August. Who should be modeling whom?
OK Policy has led the effort in opposition to any further income tax cuts right now, and a coalition is apparently emerging that by de facto makes the issue the number one priority for progressives in the state. The House Democrats’ 2012 agenda even “first and foremost” opposes “radical efforts to again further reduce the income tax for the wealthiest among us.”
But the word “progressive” hardly refers to all of Oklahoma’s dwindling number of elected Democrats, some of whom are quite conservative and could actually support a tax cut this year. As you may recall, former Gov. Brad Henry signed a large tax cut bill in 2006.
But here are a couple of questions progressives should ask themselves about this upcoming legislative session: Should they make opposing state income tax cuts their main issue? Are there initiatives or programs progressives could support in the affirmative that might make better use of what little progressive energy there remains in the state?
It’s important to ponder these questions after considering some of the possible outcomes for progressives in the perpetual tax cut war this year:
- Total victory. No income tax cuts this year. This seems unlikely given the fact that tax revenues are in an upswing, Republicans control state government, the governor says she supports tax cuts and the corporate power structure in Oklahoma, beyond some chamber of commerce opposition, has so far remained fairly silent about the issue. Even if progressives can claim total victory on the issue this year, what about next session and other future sessions? Will the GOP, in the foreseeable future, give up on its efforts to cut taxes and shrink government? That’s not going to happen. A one-year respite is essentially what progressives will get if they win the battle this year. If revenues continue to increase, the battle will only get tougher. The elections in 2012 will probably increase Republican majorities in the House and Senate. Thus, progressives will have to fight the tax war almost immediately against larger odds.
- Limited victory. A small tax cut. This could happen. For example, the proposal to reduce the top income tax rate to 2.25 percent immediately might get tabled while a smaller cut, say the reduction from 5.25 to 4.75 percent over two years, gets implemented. But, again, this doesn’t mean that more tax cuts will not be proposed and passed in the future. Will the fight for even more tax cuts resume in 2013? How will it affect morale if progressives spend most of their energy on opposing tax cuts year-after-year, suffering defeat year-after-year? Does it even matter at this point?
- Limited loss. A medium size tax cut. This is a possibility, too. The legislature could hypothetically cut the top income tax rate to 3 percent over two or three years or so, with an eye toward eliminating it altogether in the future. Fallin, for example, is on record as saying she would like to reduce the income tax rate to 3 percent over several years. Again, this would not preclude an immediate GOP effort to accelerate the tax cut if revenues continue to rise exponentially in coming years. This would be a demoralizing loss for progressives after placing so much effort into opposi
ng the tax cut, and it would be difficult for them to continue an organized fight.
- Total loss. An immediate major tax cut followed by a swift, complete elimination of the state income tax. This is unlikely. The issue would be whether Fallin would sign such a bill and whether the legislature would override her veto if she did. If this doomsday scenario becomes a reality, progressives could only hope that the ensuing cuts to government and education might convince Oklahoma voters to stop their overwhelming support for conservative political candidates, but even that outcome seems ambiguous at best. There’s always been the somewhat sarcastic argument among progressives here and elsewhere to just allow conservatives to supposedly doom themselves with radical political actions, but does that argument even apply anymore in Oklahoma? That makes this scenario unpredictable, but it would essentially end for the time being-perhaps an entire generation-the progressive fight here to prevent or limit tax cuts. Are progressives then going to spin their wheels fighting to raise taxes here?
Another important factor to consider is that Henry, once the state’s leading elected Democrat, and OK Policy were strongly opposed to State Question 744, the recent ballot measure that would have increased educational funding here to a regional average. The measure failed in a landslide vote. I could be wrong, but this probably created at least some animosity between natural allies on some progressive causes, especially because the state’s educational system has faced severe state budget cuts in recent years. If SQ 744 would have passed or even failed by a slimmer margin, the current tax-cut debate here would have a different frame, and I would argue-note the “I”-progressives would hold a much stronger position in the current tax-cut debate. Will teachers, especially members of the Oklahoma Education Association (OEA), which supported SQ 744, now flood the state Capitol en masse to oppose a cut in the income tax and possible future cuts in their salaries and/or benefits? Maybe so. What choice do they have now? (That’s politically inspiring, isn’t it?)
More importantly, will we see a massive amount of corporate-funded television advertisements this session, night-after-night, featuring Henry, his wife, Kim, and other prominent Oklahomans, who argue something like: “When it comes to income tax cuts this year, the answer is always no”? If so, I will immediately and gladly concede my misreading of the current political milieu in the state.
I do think that progressives at this point should at least consider placing more energy on supporting affirmative initiatives. By all means, stakeholders, whether progressive or not, should vocally oppose the tax cut, and they will, but what about expending just as much progressive energy and money, if not more, on initiatives that do more than just react to specific items on the conservative agenda, a process which is draining and, in most cases here, unproductive. Where are the wide-sweeping proposals from those progressives controlling what amounts to the official agenda right now? Where are the popular, resonating proposals that might demand conservatives rethink their tax cut strategies? Do progressives here only stand for or organize under the rubric of opposing standard conservative initiatives? If so, that’s simply not an effective long-term strategy, and it creates a sense of a dismal, bleak future for progressives here, which only compounds the error. I guess young progressives can always just move out of the state like former Senate Minority Leader Andrew Rice.
If, as expected, Fallin and Oklahoma GOP House and Senate leaders support another income tax cut proposal this legislative session, it’s difficult to see how it can be stopped. Even if it CAN be stopped this year, the tax-cut issue is not going away anytime soon.
Progressives here need to stand for something rather than just debating the negative position in Oklahoma’s perpetual tax cut war.
(NEXT: Really? The side shows rile the progressive base.)