Fallin Claims She’s Ready For Tax Overhaul

[Conan71]

In her State of The State Address, Governor Ballin (<<<this is what auto-correct does with her last name, you can't make this up) is to outline a tax overhaul.

Among the new taxes Fallin said she will recommend in her state of the state is an increase in the tax on cigarettes and the elimination of some of the dozens of sales tax exemptions that cost the state hundreds of millions of dollars every year.

Fallin made similar suggestions in her state of the state last year to no avail. She said she hopes the 32 new House members and 13 new senators might be more receptive to her ideas.

Read more here: http://www.mcclatchydc.com/news/politics-government/national-politics/article130889064.html#storylink=cpy

The problem is, this really addresses nothing new.  We will still apparently be sales tax driven.  We will remove some sales tax breaks (unspecified).  Until we know what those breaks are, it's hard to comment but if it takes away things like manufacturer's exemptions on new capital equipment, you might be creating a disincentive for business to expand, create jobs, and increase their own taxable income.

The other solution is to raise sales taxes on cigarettes again.  This was touted as a way to get people off tobacco, remember?  So if you raise that tax again, aren't you likely going to keep those collections static or possibly decrease?

In other words the same fiscal insanity.  We will keep doing the same thing over and over hoping for a different result but ending up chronically under-funded because no one wants to be tagged as increasing taxes if we changed the bigger part of the tax base from consumption-based taxes to income or property.  There is a certain level of developmental disability being shown here (because when I say: "retardation" everyone gets upset).

[cannon_fodder]

Interesting article on sales tax exemptions in Oklahoma:

http://www.tulsaworld.com/news/state/oklahoma-sales-tax-exemptions-a-tale-of-haves-and-have/article_7202af64-6ae7-5b38-96ad-4b1ffbd34338.html

The National Rifle Association is exempt from the sales tax in Oklahoma. The American Civil Liberties Union is not.
Organizations promoting the preservation of wild ducks and turkeys get a sales-tax break. Groups promoting different wildlife, or the welfare of dogs and cats, do not.
Oklahoma chapters of the Daughters of the American Revolution have a specific sales-tax exemption. The League of Women Voters of Oklahoma does not.

The exemptions are piecemeal and may be politically motivated.  Youth sports are tax exempt.  Coal mining is tax exempt. Many of the exemptions are for churches or church sponsored programs.  I can't see our legislature confronting the cherry picked exemptions as a means of raising more revenue.   And if we did, we might make a small dent in the budget concern.

And more cigarette taxes?  I say tax them all you want to cover the costs associated with smoking.  I personally don't care about taxing them to oblivion because they serve no purpose and I don't smoke... but ideologically, that's a crap reason to increase a tax.  But I'm not sure it matters, how much money can we get from a cigerette tax?

HOLY CRAP:
http://okpolicy.org/resources/online-budget-guide/revenues/an-overview-of-our-tax-system/oklahomas-major-taxes/tobacco-tax/

We  generate $280,000,000 from the tobacco tax.  Wow.  It accounts for 2% of all tax revenue in the State of Oklahoma.  At ~$1 per pack that's an astounding 80 packs of cigarettes for every single person in Oklahoma per year. That's mind blowing money, no wonder the state pays so much attention.  Vapor regulation has to come soon or it might cut into their profit center!

Still, lets pretend we double that, that the revenue distribution from the tax changes so all new money goes to the general fund, and that people don't buy less or do more to avoid taxes (smuggling from Kansas which would be ~$2 per pack cheaper or Missouri at $2.50 cheaper, Indian Smoke Shops, etc.)... that's another $280,000,000.  It STILL doesn't fix the budget concern, should be a revenue source we hope goes away, and almost  certainly disproportionately hits poor people (though it is a voluntary tax).


https://taxfoundation.org/state-cigarette-tax-rates-2014/

[Conan71]

And here's what she proposed:

So we eliminate the regressive sales tax on food which I think most of us on here have thought would be a good idea as that is the most basic human need along with water and shelter so it has a tendency to make the highest impact on the poorest amongst us.  

Sounds great in theory, but she proposes replacing that with a sales tax on services.  That means you would pay sales tax on a service call to fix your air conditioner, labor for auto repairs, or lawn cutting.  I am aware equipment rentals are taxed in other states as a "service".  I'd be curious to see what all this would equate to and how it would replace the lost revenue from groceries. I can see a little bit of merit in taxing services as typically they are not purchased over the internet and would be locally based.

She also proposes eliminating corporate income tax which amounts to $330 million a year because it's seen as an incentive to boost economic development and gets rid of loopholes.  Eliminating corporate tax in Oklahoma won't be an incentive to lure new businesses and industries with underfunded public education, crumbling infrastructure and a state government which lacks any sort of economic sophistication.

Basically we re-jigger consumption-based taxes and eliminate another source of income tax.  

Oh, but she's proposing giving $50 million in new funding for higher education and the DOC while there still appears to be a huge gap for common ed.

I could be all for this if the state would start operating more efficiently and take a real stab at eliminating waste and crony capitalism which seems to benefit the friends of legislators.

Looking into my crystal ball, we do these things and we end up courting a $2 billion gap in a few years.

Fallin calls for elimination of sales tax on groceries at State of the State address

OKLAHOMA CITY -- Gov. Mary Fallin proposed an overhaul of the state sales tax system, including elimination of the state tax on groceries, during her State of the State address to open the 2017 legislative session on Monday.

"This plan eliminates the most regressive tax on the books today, the state sales tax on groceries," the governor said. "This will benefit all Oklahomans. Eliminating the state sales tax on groceries is expected to result in annual savings of between $350 to $676 for a family of four."

Fallin also proposes eliminating the state corporate income tax, which netted about $330 million in FY 2016 and is running about 60 percent off that pace in FY 2017.

Elimination of the corporate income tax, the governor said, "will reduce the paperwork and red tape burden of many small businesses in our state and boost economic development. Eliminating this tax provides more transparency as it also eliminates the need for the Legislature to pick winners and losers with specific tax credits."

The governor apparently believes the lost revenue can be recovered by expanding the sales tax base to include services and by raising fuel and tobacco taxes. Those measures, unlike repealing the grocery sales tax and the corporate income tax, would likely require a three-fourths votes of both the state House and Senate or a vote of the people.

Fallin said her budget, to be presented later Monday afternoon, "basically mirrors" the 2003 state budget, adjusted for inflation. She acknowledged the state's population has grown by several hundred thousand since then, and that the number of school-age children has grown by almost 50,000.

Despite that, she did not explicitly promise common education more money, saying only that teachers should get raises and implying it could come out of administrative costs.

Fallin did recommend $50 million in new funding for higher education, and two bond issues -- $50 million for corrections, and an unspecified amount for a new Department of Health laboratory and other needs.

http://www.tulsaworld.com/homepagelatest/watch-live-fallin-calls-for-elimination-of-sales-tax-on/article_c825de48-1437-5d5a-9191-3257d22762f4.html

[cannon_fodder]

Eliminating the corporate tax has been a long time coming, per the current leaderships agenda.  Each year we chip away at revenue sources that can afford lobbyists - corporate taxes, production taxes from oil and gas, income taxes that save the wealthiest significant money, etc. Each time we are promised that this will increase business activity and growth will more than offset any revenue losses.  Each time we suffer more revenue losses and are told we need more taxes on everyone else to help offset them, but we need to give the lobbied interest just a few more tax breaks and business will pick up, new revenue will more than offset the tax losses.

Taxes are damaging to business and to personal wealth, there is no doubt about that.  But lack of responsible government, infrastructure, education, public safety, etc. is also damaging.  The constant "crisis" mode is damaging.  Taxes are just PART of the equation, which is why you see Seattle, Minneapolis, Chicago, San Francisco and Brooklyn booming in spite of being high tax areas.  And for how many decades are we supposed to listen to the "low taxes means more revenue" line of thinking before someone demands to see the evidence that actually supports it --- or the people saying it pay attention to the evidence to the contrary.

Here's a map of corporate tax rates, tell me if you think business activity seems readily correlated to the corporate tax rate, because I don't see it:


Here is a map of personal income taxes, I don't see a strong correlation of high-net worth areas and low income taxes.


Here is a map of oil and gas production in the US, see if you can tell based on the production map which areas have high severance/production tax rates (as opposed to just where oil and gas reserves are located):



If only we could find a revenue source to improve our infrastructure and fix crumbling roads and bridges...


-- - -

I'm "meh" on the grocery tax.

The grocery sales tax just leads to more fun debates: what counts a grocery item?  Is a can of Red Bull a grocery item as well as a gallon of milk?  What about a pumpkin used to make pie vs. one used to decorate your house for Halloween?  How about vitamins?  If groceries are tax free and we have a tax free weekend for clothing, why are feminine products taxed?  For that matter, why are any healthcare products taxed?  If food in a grocery store isn't taxed, why are restaurant sales - it is a competitive disadvantage for restaurants! The actual answer is "too bad, we need a wide variety of things to survive but the government is going to arbitrarily decide not to tax some things."

Ignoring all that (which really does come up in states with grocery tax exceptions), excluding the grocery tax is always a higher savings for wealthier families.  Tax on a box of Mac n Cheese is 9 cents, tax on a lobster dinner for two is a few bucks.  Danged if you do, danged if you don't...

[Conan71]

And in all fairness, Murr Fail did say she favors increasing our fuel tax more in line with other states in our region.  Oklahoma consistently has some of the lowest fuel prices in the nation, adding 5 cents a gallon would not incentivize interstate traffic to avoid Oklahoma.  Really, what are one's options going west from Missouri, the lowest in the region, looking at the map?

There's no reason NOT to add 5 cents per gallon, that is a bird's nest sitting on the ground and would hopefully alleviate our shitty road conditions.

I would also remove sweet tax deals for oil production in the state.  It's a depleting natural resource.  Sooner or later it will be needed, why are we essentially giving away taxable revenue on something which can't be "manufactured" elsewhere?

[patric]

In other words the same fiscal insanity.

You mean the microfinancing where the agencies with the most powerful unions get their own earmarked slush funds isnt working?

Scandalous.

[cannon_fodder]

And in all fairness, Murr Fail did say she favors increasing our fuel tax more in line with other states in our region.  Oklahoma consistently has some of the lowest fuel prices in the nation, adding 5 cents a gallon would not incentivize interstate traffic to avoid Oklahoma.

Not so fast! 

She is proposing to increase the fuel tax (best way to fund roads at this point). However, in a slight of hand the increased revenue from the fuel tax will be offset by a factor of two by other decreases in infrastructure funding.  The net result appears to be $280,000,000 less in funding for infrastructure.

Fallin proposes directing all fuel taxes, including the $219 million from the proposed tax increases, to roads and bridges, and then redirecting more than $500 million now going to a special transportation fund to the general fund.

http://www.tulsaworld.com/news/capitol_report/governor-s-budget-offsets-cuts-with-taxes-on-services-gas/article_6a2ec125-f365-5d34-8312-0c4d4416795b.html

Most of the money from the fuel tax already goes to infrastructure.  While shifting funding to mostly rely on the fuel tax for roads is a solid decision, certainly a massive cut to infrastructure spending in a state with failing infrastructure is a bad idea.
http://okpolicy.org/resources/online-budget-guide/revenues/an-overview-of-our-tax-system/oklahomas-major-taxes/motor-fuel-tax/


She is also planning on taxing wind power, which I have no problem with.  My fear is that in the past they have wanted to tax wind in a way that doesn't make sense, and certainly doesn't go along with the normal "encourage industry" line they dole out. We have a ~1% production tax on oil and gas, an established and wildly profitable industry that requires consistent regulation, inspection, and environmental cleanup.  I'd love to see a reasonable justification for a higher tax on wind power (not as established, not as profitable, doesn't require consistent oversight, little risk of environment cleanup).

Bonus prediction ---

Our benevolent leaders in OKC will sell this as a package deal. Eliminate corporate taxes, then try to tax wind, fuel and cigarettes more. Step one:  eliminate the corporate tax.  That is a simple majority vote.  Step 2:  start trying to increase taxes to offset the losses... that requires 3/4th under our newish rules.  Gamesmanship ensues.

Republicans want to be able to sandbag some to save face in tight districts.  So they will try to get 100% Democrat support.  So the Democrats will want something in return, which the Republicans won't give since they control everything... so the measures will not pass.  (this exact same thing happened last year and caused a fight on the floor already this year).

Result:  another tax cut for the wealthiest, another manufactured budget crisis.

[Hoss]

Well well...

http://newsok.com/article/5537530

[Cats Cats Cats]

LOL, sales tax off of groceries but everything else you do is 4.5%.

[Hoss]

Let's also not forget she wants to increase the gas tax (which I really wouldn't oppose) and also eliminate corporate income tax....smfh.

[Conan71]

So she is stupid enough to believe that she will get a PR boost by eliminating regressive taxes on lower incomes by ditching grocery taxes but somehow lower income families don't use utilities?

Wow! The learning disabilities are strong on this governor.