The Senate Finance Committee has approved two measures reforming Oklahoma’s income tax laws. Legislation approved by the committee on Tuesday includes Senate Bill 1623, by Sen. Mike Mazzei, R-Tulsa, and Senate Bill 1571, by Sen. Clark Jolley, R-Edmond.
SB 1623 lowers the state income tax over a two-year period and eliminates most special interest tax preferences. Mazzei said the bill is the result of the Legislature’s Task Force on Comprehensive Tax Reform.
“As these measures move through the legislative process, lawmakers will have ample opportunity for careful consideration and deliberation,” Mazzei said. “Each bill embodies the belief that lowering taxes and enabling Oklahomans to keep more of their hard-earned money while continuing to fund core state functions will result in job creation and greater economic growth for our state.”
Sen. Clark Jolley, Senate Appropriations Chairman, is author of SB 1571, also known as the OCPA/Laffer Plan, to phase out the state income tax.
“The committee vote was a crucial step for all of us who believe eliminating the income tax is the right thing to do for Oklahoma,” Jolley said. “Tuesday’s committee action means meaningful dialogue and debate can continue as we work to create greater prosperity for our citizens.”
SB1623—SEN. MIKE MAZZEI
• Lowers the personal income tax rate from 5.25% to 4.75% over two years
• Maintains revenue neutrality by eliminating most special interest tax preference items
• Eliminates the personal exemption for single filers making more than $30,000 and joint filers making $50,000 or more
• Reduces the corporate income tax rate from 6% to 5.5%
• Eliminates the franchise tax and allows the business activity tax to expire
• Maintains revenue neutrality by eliminating corporate tax credit items
• Establishes a trigger to lower the income tax rate to 4.5% upon 4% revenue growth.
• FY2013 revenue increase of $3,344,000 (Oklahoma Tax Commission est.)
• FY2014 revenue decrease of $2,668,000 (Oklahoma Tax Commission est.)
• FY2015 revenue decrease of $39,000 (Oklahoma Tax Commission est.)
SB1571—SEN. CLARK JOLLEY
• First year decrease from 5.25% to 2.25%
• Yearly reductions of .25 until income tax eliminated in 2022
• Eliminates all income tax credits, deductions, exemptions and exclusions for individual income tax filers beginning with tax year 2013
• No tax imposed on single filers with taxable income of $8,700 or less and for married filers with taxable income of $15,000 or less
• Addresses dedicated funding for TRS, ROADS, OHLAP and Ad Valorem Reimbursement from all major tax revenues
• FY2013 revenue decrease of $260 million (Oklahoma Tax Commission est.)
• FY2014 revenue decrease of $779 million (Oklahoma Tax Commission est.)
• FY2015 revenue decrease of $1,118 billion (Oklahoma Tax Commission est.)
Both measures now move to the full Senate for further consideration.