DALLAS — Conservative leaders of national and state anti-tax groups sent Oklahoma lawmakers
Elimination of state tax credits and business incentives that reduce revenues by millions of dollars a year will be on the agenda for the legislative session that begins Monday.
Grover Norquist of Americans for Tax Reform and Stuart Jolly of the Oklahoma branch of Americans for Prosperity told lawmakers in a letter that eliminating or phasing out a tax credit is a back-door way of raising taxes.
“As the 2012 legislative session begins, it is important to remember that ending a tax credit or deduction without an offsetting tax cut is a tax increase,” Norquist and Jolly said in the letter.
“When you end a credit or deduction, you take income away from the taxpayer and give it to the government,” they said. “This is undeniably a tax increase.”
Rep. David Dank, R-Oklahoma City, who chaired a joint legislative task force last year on tax credits and incentives, has introduced legislation that he said would save $250 million to $300 million in fiscal 2013, and more later.
Dank said eliminating inefficient and unproductive incentives and credits are an essential part of the effort to reduce the state income tax rate.
“We need to remember that we cannot accomplish real tax relief for all Oklahomans until we put an end to the costly sweetheart deals that have been handed to a very few in the past,” Dank said last week when he proposed the legislation.
“Those giveaways cost us hundreds of millions of dollars each year,” he said. “Ending tax-credit abuse is one vital ingredient in assuring lasting tax relief for all.”
The report from Dank’s task force said the Oklahoma tax code contained at least 480 exclusions, credits, deductions, deferrals, incentives and other special breaks.
One of the income-tax-reduction plans being considered would provide a flat rate of 2.25% in fiscal 2013, down from the current top rate of 5.25%. The rate would go down by 0.25% each year until it reaches zero.
The plan, proposed by economist Arthur Laffer and the Oklahoma Council on Public Affairs, would eliminate all current state tax credits and deductions.
A Senate task force recommended in December that the top individual income tax rate be reduced to 4.75% over two years while lowering the corporate rate to 5% from the current 6%.
The individual income tax generates about a third of state revenues.
Norquist and Jolly said signers of the Taxpayer Protection Pledge must oppose changes that increase the net tax burden on Oklahomans.
“A pledge signer could endorse and sign legislation eliminating a particular tax credit or deduction as long as the same piece of legislation contained a reduction in taxes by the same amount or more,” they said.
The legislation introduced by Dank would extend the current moratorium on all tax credits for another two years and propose s a constitutional amendment with specific criteria for new tax credits.
