Governor Mary Fallin kicked off February in Oklahoma City with her annual State of the State Address. This marks the seventh time she’s given the speech in front of the Oklahoma Legislature, and it seems to be her boldest call for reform to date. Her proposal includes reforms that will tackle Oklahoma’s need for tax modernization. While some aspects of her speech do have the potential to bring about positive change in Oklahoma, the majority of her proposed reforms seem too good to be true and will likely cost taxpayers more money.
Her first proposed reform aims to update the current tax system. “As the economy in the United States has shifted from a manufacturing-based economy to a services-based economy,” she explains, “the way we impose taxes and collect revenue no longer reflects the current economy.” Her proposed fix is to expand the sales tax base, which means that she wants to widen the pool of sales-related assets and revenues that the government can tax from. Basically, she wants more tax on more types of income. This would imply that Oklahoma has high levels of income and could handle more tax, but the state’s overall poverty rate in 2016 was 16.1 percent, ranking 14 in the nation.
Furthermore, Fallin calls for an increase in gas and diesel tax, stating that the increased revenue stream will go towards roads and bridges. She plans to raise gas tax by 7 cents per gallon and diesel tax by 10 cents. This would bring the tax up to 23 cents per gallon for gas and 24 cents per gallon for diesel, all of which will go to fixing the state’s roads and bridges. Judging from the already present construction that is slowing traffic in half of Oklahoma, the state is doing just fine in that department, and beyond that, where would all this extra money go? Construction projects on the other half of Oklahoma? Plus, for example, people who work in downtown Tulsa but live outside of the city will now have to pay more to get to work everyday. It’s actually kind of ironic: the extra cost of gas will go towards construction projects that slow traffic and waste even more gas, which will cause citizens to spend money at the gas pump. A vicious cycle.
Fallin’s proposed tax reform isn’t all bad, though. It does have some positive side effects, but the problem is that the benefits fail miserably in comparison to the annoyance this reform will cause. To begin with, the plan eliminates the sales tax on groceries. “Eliminating the state sales tax on groceries is expected to result in annual savings of between $350 to $676 for a family of four,” she states. Now, this benefit might seem all high and mighty at first, but it loses all merit when the fact that those additional savings will be spent across the street at QuikTrip to pay for the increased gas tax is taken into consideration.
Fallin’s reform also eliminates the corporate sales tax, which might benefit small businesses but won’t even have any effect on the individual customer. Businesses aren’t going to take the eliminated corporate sales tax and turn around and lower the prices of their products. That’s not how businesses work. The goal is to make a profit, so of course the business is going to leave the prices as they are and just pocket the extra money that was saved.
All in all, the problem with Fallin’s proposed reform is that it focuses on the whole, not the individual. These plans aren’t going to help a sales representative who commutes from out of city or a family on the brink of poverty who can barely afford to pay sales tax as it is. Nobody waters the branches of a tree; they water the roots. True reform lies with the individual, and when focus is shifted to them, everything else will fall into place.
