Lawmakers at the state Capitol vote to advance multi-million-dollar tax cuts Thursday.
The bills authored by House Speaker Charles McCall, R-Atoka, would provide a tax credit reducing personal income tax by .25% and phase out the corporate income tax.
“There's not a better timing,” McCall told News 9. “We have $1 billion in surplus currently. So, I think the time is ripe to help our economy make another big stride forward.”
The votes come on the final day for bills to advance out of their chambers of origin.
According to the Speaker’s office by reducing personal income tax, HB 2041 would save Oklahomans $113 per year. According to a financial impact report by House staff, the state would lose $181 Million the first full fiscal year the cut is in place.
McCall said outside of major economic disruption, personal income tax cuts are shown to increase state revenue and spur economic activity.
“Those dollars get put right back into the economy by consumption and spending,” he said.
The bill passed 91-5 with bipartisan support. House Democrats praised a portion of the plan reinstating the Earned Income Tax Credit (EITC).
“EITC is a tax credit for Oklahomans who are working, but earn under a certain income level,” Minority Leader Emily Virgin, D-Norman said. “It’s an important program at the state and federal level that reduces poverty while incentivizing and rewarding work.”
The second bill, HB 2083, enjoyed no bipartisan support passing 74-20. It phases out the often-volatile corporate income tax by adding a 20% tax credit each year for five years.
The speaker said if approved in the Senate and signed by the governor, eliminating the tax would draw business to the state.
“The corporate income tax is a detractor for the state,” he said. “Texas has no corporate income tax, has no personal income tax and so when businesses and people are looking to relocate in this part of the country, we often are overlooked.”
Democrats argued businesses would be more interesting in coming to the state if it had friendlier social policies.
“This week alone, the majority has passed several bills limiting reproductive choice, attacking the constitutional rights of people who choose to protest, claiming we can ignore federal law, and putting guns in bars & schools,” Virgin said in a Tweet. “How do we expect to attract businesses and their employees to our state when we continually ignore the real needs of Oklahomans and instead focus on bills that do nothing except pander to the far right's base?”
After the corporate cut is fully phased in, House Appropriations and Budget Chair Rep. Kevin Wallace said it would cost the state $377 million in uncollected taxes.
“Taxing the fruits of our labor is the worst form of tax you can put on the people,” McCall said. “We should try to keep those taxation levels minimized if not eliminated over a long period of time so people can spend the money that they’ve earned the way they want to spend it.”
By running the bills as tax credits instead of reducing the tax rate, McCall said the reductions could be paused or reversed without needing a three-quarters vote required to raise the state’s tax rate.