Oklahoma income tax rate phase out and related issues move to center of legislative deliberation
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Published: 08-Mar-2012

At the end of week 5 of the 2012 Oklahoma legislative session, tax policy and related issues dominated the press briefings by both Senate President Pro Temp Brian Bingman of Sapulpa and Speaker of the House Kris Steele of Shawnee. Both men continued, as was the case last week, to express support for significant tax reduction, while raising concerns about how deep cuts could go.

Senator Clark Jolley’s proposal closely follows the vision of Dr. Arthur Laffer for a steady phase out of the income tax, over a 10-year period.

In a floor exchange Thursday morning (March 8) with state Sen. Tom Adelson, a Tulsa Democrat, Jolley acknowledged that a fiscal impact analysis for the floor substitute then under consideration had not been circulated in a timely manner. The bill was laid over. Bingman said, “We anticipate acting on that Monday morning.”

In the Senate, the focus is on three proposals: Jolley’s, a less dramatic tax cut by Sen. Mike Mazzei of Tulsa, and the Steele-Bingman bill -- that is, Governor Mary Fallin’s proposal to take 15 to 20 years or more to achieve the phase out

Bingman commented, “There are good pieces, good provisions, in each of those. We are looking to go to conference and get that done. It is probably time for a task force or committee with members of both House and Senate, and some from the second floor as well.”

Bingman said he anticipates formation of “a working group” to look at each of the plans. He said, “This first five weeks has been devoted to getting the process going.” He said, “This will all start to speed up next week.”

In response to one reporter’s question concerning the assertion of influence over the process by lobbyists, Bingman said supporters of existing tax credits and exemptions were asserting themselves, but added, “I am confident we’ll have a bill with tax reductions in it.”

In response to a question from CapitolBeatOK, Bingman agreed legislators were looking for possible “efficiencies.  Over time a lot of savings are possible.”

When asked why the upper chamber had not moved more quickly on the tax issues, he reflected, ““It is easier to move quickly when you have ‘final’ bills, a work that is actually in progress. There is still a lot of work to be done.”

The income tax issue and related pieces also dominated Steele’s discussion with Capitol reporters. Steele repeatedly tied income tax rate reductions to proposals to trim or eliminate tax credits and business incentives.

He also praised the government modernization work of state Rep. Jason Murphey of Guthrie, saying the steps his colleague has led are creating savings that can be utilized for tax reduction. He also said he does not believe the newest round of consolidation steps put too much power in the hands of the State Finance Director.

In response to a reporter’s question about lobbying efforts to preserve many tax carve outs in present form, Steele quipped, “The lobbying community is alive and well at the state Capitol.” 

Steele announced he was establishing a working group consisting of selected House Republicans, led by Appropriations and Budget Chairman Earl Sears of Bartlesville, “to get input and begin to put a plan in place, and look at a price tag.” He said he would ask the group to formulate the House’s plan to eliminate or reduce income taxes.

Steele also pointed to his proposed constitutional amendment to identify and put into fundamental law the criteria for tax credits, going forward.

In response to a question, he said, “Ultimately, we will include the minority party. We want all the members to have input.” Steele repeated at least three times his believe that tax cuts and reform of exemptions/credits are directly related.

Both Steele and Bingman, in separate conversations, agreed with CapitolBeatOK’s suggestion that income tax reduction or phase out possibilities come down to a blending of four separate but related areas: 

* Income taxes; 

* credits/incentives; 

* achieving addition efficiencies including waste reduction; and, 

* protection of what legislative leaders and the governor have deemed core services.

Steele characterized the links between the income tax and reform of credits and incentives as “a very delicate issue.” 

Asked if the House working group was the start of what Sears had described “that room” where key leaders are about to go and start discussing particulars, Speaker  Steele smiled and said, “The short answer is yes.”

Steele noted the proposal by state Rep. Leslie Osborn of Tuttle, would be one of the bills under consideration. Osborn’s proposal closely tracks the Laffer tax phase out vision. 

Steele also said he would be studying a new set of recommendations from the Oklahoma Council of Public Affairs listing examples of wasteful spending. The group unveiled its suggestions at a state Capitol press conference this morning.

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