Economist Arthur Laffer, famous for his Laffer Curve that promises economic growth from low tax rates, told a civic club summit last week that he supports proposals to eliminate Oklahoma’s personal income tax over 10 years.
Laffer told a joint session of the Lions, Kiwanis, and Rotary clubs in Oklahoma City last week that the tax is the main obstacle to economic growth in Oklahoma.
“It’ll lead to a lot faster growth for Oklahoma,” Laffer said. “You’ve been a very good performing state, but you still have a way to go to be really superb.”
Gov. Mary Fallin supports a plan to phase out the income tax, but opponents say the state cannot afford to lose one of its main revenue sources. The tax accounts for 37% of general fund revenue.
Laffer said getting rid of all income tax deductions, exemptions, and credits would reduce the top tax rate to 3% from the current 5.25%. Without those exemptions, he said, the tax would generate as much money as before.
The proposal by the Oklahoma Council of Public Affairs would gradually reduce the tax rate to zero by 2022. The rate reduction would be linked to spending cuts.