Four first-term Senators have jointly filed a bill to implement the plan proposed by legendary economist Dr. Arthur Laffer to phase out the Oklahoma income tax.
SB 1587 is authored by Senators David Holt, R-Oklahoma City, Greg Treat R-Oklahoma City, Rob Johnson, R-Oklahoma City, and Josh Brecheen, R-Coalgate. It would lower the Oklahoma income tax rate from 5.25 percent to 2.25 percent in 2013, and then gradually lower it until the rate is zero in 2022.
"We hope that by introducing the Laffer Plan, we're ensuring that its ultimate goals remain part of the debate, not just this year, but beyond," Holt said. "All four of us recognize that this bill is just the beginning of a conversation, and it's not presented as a final product. We are committed to making sure Oklahoma's government delivers on its core missions, but we also cannot ignore the economic growth happening in states without income tax."
The first reduction in the income tax rate is paid for by cuts in nonessential spending, along with the elimination of most personal tax credits, exemptions, deductions and exclusions. Further reductions in the rate are paid for by natural revenue growth and dynamic economic growth that would occur as a result of the initial reduction. It would not be necessary to cut core services or increase any other tax rates, including property and sales tax.
The legislation introduced by the four senators is based largely on a study conducted in late 2011 by the Oklahoma Council of Public Affairs (OCPA) and Arduin, Laffer & Moore (ALM), the econometrics firm co-founded by economist Dr. Arthur Laffer, once a key advisor to President Ronald Reagan. OCPA and ALM demonstrated in the study that states without personal income tax tend to enjoy economic growth that far surpasses the states that levy a personal income tax.
The full report on the Laffer Plan can be found at: http://tinyurl.com/LafferPlanOK