The chairman and co-chair of a state tax reform panel last week urged the group to support a gradual elimination of Oklahoma’s personal income tax.
Sen. Mike Mazzei, chairman of the Task Force on Comprehensive Tax Reform, also wants the panel to eliminate special-interest tax exemptions that cost the state millions of dollars a year.
“The best tax systems in this economic era are broad-based with low rates that do not favor one activity over another,” Mazzei said. “Our system, however, is riddled with tax subsidies, deductions for political contributions, credits for remodeling old buildings, exemptions for vitamins, and incentives for business activity which would happen anyway.”
Co-chairman Rep. David Dank said the revenue lost from income taxes could be replaced through an increase in the state sales tax rate.
Danks said it would not be feasible to eliminate all of the estimated $5.6 billion in annual tax exemptions and credits, but predicted that the 2012 Legislature would close many of them.
The personal income tax brings in $1.8 billion of Oklahoma’s $6.5 billion in general fund revenues. The state sales tax generates about $1.7 billion a year.
The task force is to present its findings to the governor and lawmakers in January. The Legislature will convene in February. The 21-member task force includes state officials, bankers, education administrators and business executives.