The special legislative session to address tax cuts called by Governor Stitt this month took off like a lead balloon and never went anywhere. Special sessions are doomed to fail, unless the governor and legislative leaders actively communicate behind the scenes about a framework for an agreed-upon strategy, before launching a special session.
For now, no one at the state capitol has publicly released any details about how to cut taxes while avoiding the mistakes of the past when tax receipts drop during an inevitable recession or oil bust.
During previous “good times", state leaders fell prey to the siren songs that tax cuts, increased spending and enormous tax incentives would all just work out. Fantasy always gives way to reality, and years of ensuing budget shortfalls have kept us from great goals like keeping up with the regional average of job and population growth.
The average economic growth of the nine no-income states (not counting Alaska) over the last 10 years is approximately 36% greater than Oklahoma’s growth, and the average population growth rate is a whopping 100% greater than ours.
There is a reasonable and rational way to deliver tax cuts—and even become a no-income tax state. First, the rate can be lowered and most of the drop in tax collections can be offset by eliminating over $1 billion worth of special tax deals that help a few and hurt the many.
Second, another round of lowering the personal income tax rate can be offset by unwinding over $500 million worth of sales tax exemptions that don’t exist in no-income tax states like Tennessee.
Finally, one must realize that 70% of the economy is now based on services, and some service items, like getting a tattoo, need to be taxed.
The state’s executive and legislative branches need to have actual conversations about these items to make forward progress—instead of having a wasted special session. Sen. David Rader and Rep. Jeff Boatman have some great ideas, and I hope others will follow their lead.