By Charlie Meadows

In his State of the State Address on the first day of this year’s session of the Oklahoma Legislature, Governor Stitt challenged the lawmakers to put on his desk a tax cut of one half a percent and then a pathway to get our state income tax reduced to zero over a reasonable amount of time. Since the revenues for this year are a little less than that available last year, some legislators are suggesting there is little chance for a tax cut this year.

Therefore, it appears the legislation regarding tax cuts with the best chance of passing this year is House Bill 1539 by Representative Mark Lepak (R-Claremore) in the House and Senator Micheal Bergstrom (R-Adair) in the Senate. This legislation includes no tax cut for this year, but future years with growth revenues of $300 million or more as certified by the State Board of Equalization each December, our state income tax would be reduced by one quarter of 1 percent.

Are we serious, is this how the reddest (most conservative) state in the union plans to SOON join the nine red states that have NO STATE INCOME TAX? Let us look at this a little closer. Assuming we had no more down years like we are experiencing this year, and that all future years would produce at least $300 million in revenue growth, it would take a mere 19 years to get to zero. I would be close to a hundred years old. Because of term-limits, none of the current legislators would still be in the Legislature, and none of the statewide office holders would remain in their current office. But, at least everyone that votes for this weak and slow piece of legislation could tell their grandchildren they did the best they could. Sorry folks, but this is a pathetic effort for such a conservative state, that is unless we really aren’t all that conservative.

Please allow me to do a little finger pointing, starting with Governor Stitt. One of the most important goals of the Governor since he took office is to see the economy grow. In his early years, he was able to recruit many businesses from the state of California. However, his effort to recruit a company like Canoo ultimately failed. At least we did not spend a lot of funds to get them here, and I believed to have a company that manufactured EVs was a slap in the face of a state with so much of our economy based on the oil and gas industry.

As bad of an idea that was, I believe his biggest blunder was to join the efforts of the Democrats who have pushed for many years to eliminate the sales taxes on groceries. That successful effort, helped along by some Republican lawmakers, has cost the state of Oklahoma about $500 million in revenues a year for now and for the years to come.

Had that not happened, Oklahoma could have cut both the state income tax by half of 1 percent last year, as well as the same amount for corporate taxes. With growth in population, and increasing prices for groceries over future years, that revenue stream would have increased considerably which would have allowed us to increase the speed with which we could reduce personal and corporate income taxes, perhaps eliminating both within five years.

Over the years when vetting legislature candidates, we used to ask this question: “If you could reduce or eliminate only 1 of the following 3 kinds of taxes, which would you choose as the best to stimulate the economy of Oklahoma: corporate income taxes, sales taxes on groceries, or personal income taxes?” People that have a basic understanding of economics will tell you eliminating corporate taxes is valuable because if you can reduce to cost of producing goods or services, that makes businesses in such a state more competitive nationally and internationally. Or, if you reduce state income taxes, that causes the CEOs and employees of a business to want to work in such a state so they can keep more of their earnings. However, eliminating sales taxes on groceries has no effect upon growing the economy.

Corporate income taxes, along with gross production taxes, are a fairly unstable source of revenue and the amount of corporate income taxes received by the state treasury is much smaller than personal income taxes. Therefore, under normal circumstances I would suggest eliminating corporate taxes first. Another positive for eliminating corporate income taxes first, is that once they are gone, we can announce to businesses everywhere that Oklahoma is serious and open for business. Most people don’t understand that corporations really don’t pay taxes, as those taxes are considered as overhead and are passed on to the consumers through higher prices on their goods and services.

What to do, what to do? My recommendation is that a group of courageous lawmakers cosponsor legislation to restore the sales taxes on groceries and use that to reduce our personal income taxes by three-quarters of a percent the first year, and a half percent the next year. Everyone that works, would probably be better off from income tax savings than not paying sales taxes on groceries. For people not earning money, we could increase the sales tax rebate we currently have for people of a certain age, but rather than based on age, rebate only to those not working. In the third year, we could accelerate the reduction of corporate income taxes twice as fast as reducing the personal taxes.

Why is this so important? Other states such as Iowa have gone from 8.9 percent in 2018 to 3.8 percent starting January of 2035. Mississippi has cut its rate from 5% to 4.7% to 4.4% for 2025, and is scheduled to go to 4% in 2026. Now, Indiana is seeing their flat-rate go from 3.05 to 3%, Colorado is reducing to 4.4%, and Arkansas was 4.9% in 2023 and this year has a top rate of 3.9%

Under President Trump’s successful efforts to bring back manufacturing and high-tech businesses to the United States, we are seeing almost daily announcements of such moves, and these new businesses are mostly locating in red states with a lower tax rate, and especially those states with no state income tax. So I ask, how many announcements have we seen recently about these businesses locating in Oklahoma? We are not even in the running compared to states that already have lower tax rates than we do in Oklahoma.

Surely our legislature can do better than House Bill 1539 which would reduce our income taxes at the speed of a slow-moving slug. Not only do we need to get in on the new economic growth for Oklahoma’s benefit, but the nation needs what our productive citizens can contribute to building our economy and reducing our dependence upon Communist China!

Charlie Meadows is the founder and former president of the Oklahoma Conservative Political Action Committee (OCPAC). He was later elected County Commissioner for District 2 in Logan County. He may be contacted at: charliemeadows7@gmail.com