The Oklahoma economy is no longer “in crisis,” but hat doesn’t mean our economy is in the best possible shape.
I believe the two best solutions are restoring income taxes on the rich and an increase on the gross production tax on new oil and gas wells. Neither negatively impacts the average citizen and both produce a steady stream of funds for the government.
In comparison to other states, Oklahoma is lower than other major well-producing states such as North Dakota and Texas. Before a bill was passed in 2014, Oklahoma’s rate was around 7 percent which helped provide revenue for the state government. Now it is two percent.
According to the Oklahoma Policy Institute, “Compared to Oklahoma’s traditional 7 percent tax rate, this tax break is costing close to 500 million annually.” While a larger tax on one of the main industries of Oklahoma, oil and gas may seem dangerous, the industry continued to survive in the past without the need for such a large tax break. This idea also has the support of oil and gas producers themselves. In a statement given in April, the Oklahoma Energy Producers Alliance, a group of privately owned Oklahoma energy companies, have agreed to this rise in oil spending. Former mayor Dewey Bartlett Jr, owner of Keener Oil and Gas, stated “We believe that the oil industry should stand up and agree that returning the oil and gas production tax to its historical level demonstrates our commitment to help solve this serious state budget crisis.” While some oil and gas producers are for the increase, groups such as the Oklahoma Oil and Gas Association and the Oil Independent Petroleum Association have stated that they already bear more than its fair share of the tax burden. While this bill may be controversial, this increase in taxes will help fix the current shortfall in the Oklahoma state budget.
One of the major taxes that funds the Oklahoma state government is the state income tax. However according to the Oklahoma Policy Institute, “Oklahoma has cut its top income tax rate by nearly 25 percent since 2004 . . . reducing annual revenues more than $1 billion dollars.” This massive loss of revenue causes serious problems for the state government for two reasons. The first being that the richest members exist in the top tax brackets and therefore pay the most to the government. In reducing the state income tax for the higher tax brackets, the state government has lost a large source of revenue.
Another reason is that inflation has risen since 2004 causing every tax dollar to be worth less. The CPI Inflation Calculator, run by the Bureau of Labor Statistics, states that the same dollar in January 2004 was now worth $1.33 in September 2017. Each tax dollar is now worth less than what it was previously. 33 cents does not seem like a big deal but once extrapolated to millions of dollars, it becomes a serious problem.
A restoration to the old income tax on the top tax bracket also has less effect on regular Oklahoma citizen. According to the Oklahoma Policy Institute, “Oklahoma could restore a rate of 6 percent on income over 200,000 and 7 percent on income over 400,000. Only 3 percent of households would be affected by these new rates.” Through using this tax, it would massively help the federal budget while causing potential problems for a small minority of people.
Through these two taxes, the Oklahoma state government will be more able to fund important government functions. This could save departments such as education, human services and mental and substance abuse services which provide for children and adults in their times of need. While these taxes help fund the government, they do not have massive effect on the populace at large. These taxes do not afflict those who cannot handle the extra burden. Through new taxes such as these, the Oklahoma state government will be hopefully be able to properly provide for its citizens both rich and poor.