Tuesday, February 6, 2018

Step Up Proposal Just Another Tax Grab; By Rep. John Bennett

At all levels of government, we hear sky-is-falling hysteria from bureaucrats and tax consumers.

Oklahoma isn’t immune. Those who favor bigger government demand more money.

They use code words, but don’t be fooled. When tax consumers say state government needs “more revenue,” they mean more of your money.

Just 15 months ago, 59 percent of voters rejected State Question 779, the “Boren Tax,” which would’ve increased taxes by $615 million on working Oklahomans.

But, bless ’em, the tax consumers rallied. Now they’ve convinced big business interests to champion an even bigger tax grab. It’s called Step Up Oklahoma, and it features numerous tax hikes totaling $780 million a year.

The Step Up proposal raises taxes on oil and natural gas drilling, which many think is a good idea. However, it also raises taxes on gasoline and diesel fuel, on tobacco products and on your paycheck. Oklahoma currently charges the lowest fuel taxes in the continental U.S. Step Up’s proposal raises the tax by 6 cents per gallon. Oklahoma’s gasoline tax would rise above every nearby state except Kansas.

Presently, Oklahoma charges a cigarette tax of $1.03 per pack. Step Up raises it to $2.53. This dramatic increase is concerning. Consumers can choose where they buy products. Step Up’s proposal raises Oklahoma’s cigarette tax to more than double what Arkansas charges. This makes the decision easy for many local smokers. As more Eastern Oklahomans buy cigarettes in Arkansas, that’s less tax revenue for schools, roads, public safety and other services on this side of the state line. Meanwhile, few will smoke less.

Also troubling is Step Up’s avalanche of income tax increases.

The proposal eliminates the personal exemption, which is $1,000 per individual in taxpaying households. It reduces the standard deduction, which most income tax filers use, and caps itemized deductions for others.

All together Step Up raises income taxes by $175 million a year.

Most of this is shouldered by middle-income families with household incomes of $70,000 and above. That’s equivalent to a firefighter married to a teacher, a law enforcement officer and a nurse, a welder and an office assistant.

Tax consumers have convinced the business community that it’s in their best interest to persuade state lawmakers to raise taxes.

So who’s the loudest voice for Step Up’s money grab? The plan is promoted by an armada of bankers, oil barons, industry groups, chamber of commerce execs, tribal governments, giant hospital administrators and corporate lawyers, mostly from Oklahoma City and Tulsa.

If oil and gas producers want the Legislature to raise taxes on their industry, fine. Ironically, though, of the four major tax increases included in Step Up’s proposal, the increase on oil and gas is the smallest.

Step Up increases taxes on oil and gas by $133 million. But its fuel tax increase exceeds $170 million. Its tobacco taxes surpass $256 million. Its tax hike on working families’ paychecks is more than $175 million.

We don’t need massive tax increases. Oklahoma’s economy is improving. Oil prices are rising.

After major budget shortfalls in recent years, estimates project the current shortfall facing Oklahoma at just $118 million. By spring, when lawmakers vote on the state budget, it could be lower.

To give classroom teachers a pay raise and stabilize other core public services, we have better options than $780 million in tax increases.

We can conduct more rigorous Medicaid enrollment eligibility audits, like Arkansas, and save an estimated $85 million annually.

We can stop bailing out mismanagement at state agencies, like the recent $30 million bailout for the state Health Department.

We can utilize some of the $57 million paid annually to Oklahoma’s Tobacco Settlement Endowment Trust Fund, which exceeds $1 billion. (Yes, that’s “billion” with a “b.”)

We could require bloated school administrations in Oklahoma’s two largest metro areas to downsize and give more money to teachers. This would free up funds to increase teacher salaries elsewhere around the state.

These are a few of the cost-saving reforms that some at the Oklahoma Capitol are pursuing. I hope to receive your feedback on the Step Up proposal and these cost-saving alternatives

Why are we entertaining tax increases when the economy is recovering? We must address unaccountable, out of control spending and ensure core functions are receiving what they need before we look at raising taxes.

John Bennett represents Oklahoma House District 2. He can be reached at (405) 557-7315 or John.Bennett@okhouse.gov.

Sally Maxwell, Senior News Director

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