A recent editorial in The Oklahoman that argues the state “top income tax rate is too high” is an indication that Republicans and the corporate power structure here have cemented a plan to reduce the income tax again this coming legislative session.
It’s highly unlikely the plan can be stopped. The activists who oppose the upcoming cut do so with the best intentions but specific efforts and the money spent to try to stop it might be better used developing and implementing long-range initiatives to bring more political balance to state government.
The plan, as with other recent income tax cuts in the state, will overwhelmingly benefit the state’s wealthiest citizens. In recent years, middle class and some poor state residents have seen their taxes drop, too, but their small tax “savings,” combined with the huge tax-break largess of the richest citizens, have been at least partially responsible for major cuts in state services and education.
None of this should come as any surprise. The Republicans have solid majorities in the House and Senate and the governor is a Republican. Democrats here are in complete disarray, and many no doubt will favor more tax cuts, anyway. For the most part, the kooky and often infuriating proposed social-conservative legislation and statements made by legislators like state Rep. Sally Kern (R-Oklahoma City) are really just a sideshow to the main performance. Republicans here are pretty much unified in their quest to cut taxes and shrink government. That’s neither a controversial or hidden agenda. It’s a reality.
The editorial, titled “Debate over income tax needs more than rhetoric, platitudes” (Jan. 9, 2012), is a classic piece of doublespeak mush that argues people on both sides of the issue should tone down the “divisive rhetoric” while apparently exempting itself. Thus, there are references to “Barack-Obama style class warfare” and “tax consumers.” Here’s the editorial’s first paragraph:
A coalition is forming to “safeguard” funding for state services. That’s code talk for opposing state income tax cuts.
What does “code talk” mean in this context? It’s demeaning. There’s no code talk. Is it really hyperbole to use the word “safeguard”? The proposed income tax cut, from 5.25 percent to 4.75 percent in the top rate over two years, will almost certainly lead to more cuts in state government or, at the very least, stagnant budgets because the income tax accounts for approximately a third of state revenues.
One of the ways the cut would be paid for would be the elimination of the $1,000 personal exemption. Under this rubric, according to some experts, a family of four earning $50,000 would save around $40 a year with the cut. Obviously, families earning more stand to gain more incrementally. This is not “divisive rhetoric”: it’s math.
Of course, many in the GOP want to eventually eliminate the income tax altogether, which will have to result in increases in sales and property taxes. Sales taxes, in particular, fall disproportionately on people with lower incomes, and high sales taxes here would drive people to other states or to the internet to make large purchases. Property tax increases would mean higher rents for middle-class and lower-income people. An extra $40 a year would hardly make up for a $100 a month rent increase.
The Oklahoman editorial urges a new coalition now getting formed to oppose the tax cut to “play it straight and drop the class warfare rhetoric” and admit its participants “want higher taxes.” It also deems the proposed cut from 5.25 to 4.75 percent as “relatively conservative” given that some Republicans want even deeper cuts.
Yet the editorial won’t concede the obvious in its own position: rich people will benefit the most from the tax cut and more cuts to state government are sure to follow.
As I’ve written before, two events could stop the cut: (1) The state’s corporate power structure could come together and decide that more cuts to education and state services will actually hurt their businesses and the state’s overall economic future because they would lower the quality of life here. This is what happened with the TABOR proposal a few years ago. (2) If tax revenues start to plummet again, which is not likely in the immediate future, Republicans might put the brakes on the plan for now.
The reality is that Republicans have a large majority in the legislature and those Democratic politicians who oppose the tax cut and the elimination of the income tax altogether are simply irrelevant.
It’s hard to conceive the general psyche of the Oklahoma voting electorate majority can be changed without a major financial crisis, such as an extended depression. Meanwhile, any cuts to the income tax must be considered permanent. Can you imagine the electorate here ever voting for a tax increase?
It was the corporate power structure and powerful politicians in both major parties and the state’s two leading think tanks that told us “the answer is always no” to State Question 744, the 2010 ballot initiative that would have increased educational funding here. What we’re getting now are more tax cuts for rich people, which will inevitably lead sooner or later to more cuts in education.
It would take a concerted campaign of the anti-SQ 744 magnitude to stop more income tax cuts here. I hope I’m wrong, but I can’t see that happening.