DALLAS – An Oklahoma lawmaker will try again in 2013 to eliminate unproductive corporate tax incentives as compensation for lost revenue from a proposed reduction in state personal income taxes.

A failed attempt to rein in economic tax incentives in the 2012 Legislator is no reason to end the effort, Rep. David Dank, R-Oklahoma City, said at the first meeting of the House Tax Credit and Economic Incentive Oversight Committee on Sept. 12.  

“Oklahoma is giving away hundreds of millions of dollars in credits and incentives,” he said.

Dank headed a legislative task force in 2011 that recommended a number of restrictions on corporate incentives to the 2012 Legislature, but none made it out of committee.

Measures similar to those defeated in the 2012 session will be back when the 2013 Legislature meets Jan. 8, Dank said. If those measure had been adopted, he said, Oklahoma would have realized $250 million to $300 million of additional revenue in fiscal 2013, and more later.

“Our task force said Oklahoma has handed out hundreds of millions of dollars every year to businesses and industries that didn't deserve them, did little to justify them and often manipulated them by such practices as selling the ones they didn't need,” Dank said.

“There is no accountability, no cost-benefit analysis, and no cap on a lot of these.

“It’s a runaway train.”

House Speaker Kris Steele, R-Shawnee, told the committee that the state cannot afford to reduce the personal income tax rate without increasing revenue from the corporate tax. Gov. Mary Fallin and legislative leaders proposed several measures to reduce the top personal income tax rate of 5.25% in the 2012 Legislature, but all linked the tax cut to an increase in revenues from eliminating corporate credits and deductions.

Steele, who could not seek re-election due to Oklahoma’s term limits, appointed the special House committee in July.

“Every dollar that's lost to an ineffective tax credit is a dollar that's not eligible to go to a core function of government services,” Steele said.

“If you're not successful in cleaning up and reforming our corporate tax code, it's going to be awfully hard to responsibly reduce our income tax rates,” he said.

Corporations are “gaming the system,” Dank said, and legislators should be ready for another intense attempt to retain those credits.

“I know the lobbyists are already circling,” he said. “Lawmakers are going to come under a lot of pressure.”

The state’s corporate tax system needs to be reformed, Dank said, but most of the blame for its ineffectiveness and complexity must go to the lawmakers themselves.

“When the buck stops, it stops here,” he said. “We’re the ones that should have ‘STUPID’ stamped on our foreheads if things are not going well and frankly they are not.”

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