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Letter


An Open Letter to the Oklahoma Senate: Eliminate the Personal Income Tax!

March 1, 2012

Dear Senator:

On behalf of the National Taxpayers Union’s (NTU’s) more than 4,700 members in Oklahoma, I urge you to support Senate Bill 1571 and eliminate the Sooner State’s personal income tax.

Sponsored by Senator Clark Jolley, SB 1571 would phase out the state personal income tax over 10 years, dropping the top marginal rate from 5.25 percent to 2.25 percent in the first year. Scheduled annual decreases would take place until 2022, when the tax rate reaches zero. SB 1571 improves upon similar House legislation, HB 3038, by immediately eliminating the income tax for filers in the lowest tax bracket ($8,700 for individuals, $15,900 for married couples). NTU fully supports both efforts, as they put Oklahoma on the path to the same desirable destination: a zero income tax rate.

When it comes to tax policy, SB 1571 would establish a much more hospitable environment for long-term growth. A simple comparison between those states with no income tax and those with high income tax rates shows a stark contrast. According to the American Legislative Exchange Council, from 2001-2010, the nine states with no broad-based income tax saw average population growth of 13.7 percent, an increase in state gross product of 58.5 percent, and a 5.4 percent employment gain. States with the nine highest income tax rates experienced a rise in population of 5.5 percent, state gross product growth of 42.1 percent, and a 1.7 percent decline in employment. The upshot is not difficult to understand: individuals and businesses vote with their feet and they will go to the states that offer the best opportunities.

A second, somewhat less intuitive point is that states without income taxes have outpaced the rest of the pack not only in economic growth, but in revenue growth as well. From 1999-2009, states without income taxes saw a 123.66 percent increase in collections compared to the national average of 70.23 percent. When combined with ongoing expenditure restraint, this kind of strong economic and revenue performance is a recipe for consistently stable and balanced budgets. Eliminating the burden of income taxes in Oklahoma could go a long way toward securing the state’s fiscal future.

Oklahoma leaders know all too well the long-run success of the state’s Red River rival, income tax-free Texas. The regional competition could soon become much tougher. Kansas is likely to reduce its corporate income tax to zero. Missouri could take an even more aggressive approach by phasing out corporate and personal income taxes over a period of five years.

Oklahoma has a chance to become a regional and national leader on forward-looking tax and economic policy. We urge you to support this important legislation and pledge our maximum effort to help you eliminate the income tax.

Sincerely,

Brent Mead
State Government Affairs Manager