OKLAHOMA CITY (AP) - A cut in Oklahoma’s top individual income tax rate that went into effect Jan. 1 would be rolled back under a bill passed Tuesday on a bipartisan vote in a Senate panel, a signal some Republican leaders are reconsidering the wisdom of a tax cut amid a $1.3 billion hole in next year’s budget.
Despite objections to the bill from both Gov. Mary Fallin and House Speaker Jeff Hickman, the Senate Finance Committee voted 10-2 to advance the bill to the full Senate.
“The Senate has really taken the leadership on numerous financial-reform options to deal with this year’s financial crisis,” said Sen. Mike Mazzei, a Tulsa Republican and chairman of the committee that also has approved bills to eliminate dozens of tax breaks and exemptions for both individuals and corporations. “I’m hoping that we will see the House and the governor’s office soon step up and put forth some details on their proposals to address the financial crisis, the cost of all the special tax breaks, so we won’t have to slash education funding by over $400 million.”
Mazzei’s bill also eliminates a double income tax deduction in Oklahoma that allows state taxpayers to deduct their state income tax from their state return. Mazzei said that move would save the state $80 million annually.
Hickman, R-Fairview, said the House is considering numerous proposals to generate revenue amid the budget crisis, including a price-triggered gasoline tax, expanding sales taxes to include Internet sales and certain services that currently aren’t taxed, as well as Fallin’s proposed $1.50-per-pack tax on cigarettes.
But he said the Senate’s plan to roll back the income tax would be a tax increase, something not likely to gain support in the House, where Republicans have a 71-30 advantage.
“The cut is already triggered. It’s gone into effect, and the only way to change that is to vote to increase the income tax, and there would not be support in the House for the three-quarters vote needed to do that,” Hickman said.
A 1992 voter-backed amendment to the Oklahoma Constitution requires any tax increase to receive a three-fourth’s vote in the Legislature or a vote of the people.
But Mazzei maintains declining revenue collections should have prevented the tax cut from being triggered in the first place, and that delaying the tax cut would not require a three-fourth’s vote.
Fallin also has said she does not support rolling back the income tax cut and has urged Senate leaders to be cautious in passing bills to rein in some of the hundreds of millions of dollars’ worth of corporate tax incentives that are used to attract businesses to Oklahoma.
“It would be extremely unwise for us to put a moratorium, however temporary it may be, on effective methods of bringing new investment and jobs, as well as the opportunity for increased income, to our state,” Fallin said in a statement.
Mazzei’s committee has passed dozens of bills to reduce, suspend or eliminate various tax breaks and deductions. Two bills approved on Tuesday would put in place a mechanism to impose state sales taxes on Internet sales if Congress passes a bill to allow it.
Senate Bill 1073: https://bit.ly/1Xw6tzi
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