CNHI News Service
OKLAHOMA CITY -- Carlos and Stephanie Jimenez welcomed their first child, Georgia, two weeks ago.
After a long day of special session Friday, the Oklahoma Legislature agreed to tax cuts that could save the Oklahoma City family money.
Stephanie Jimenez said some of their tax savings undoubtedly would pay for quantities of diapers they never expected.
"We got some at the shower and we had to buy more diapers," she said Friday. "We couldn't believe how many we already had to buy."
With a higher standard deduction and lower rate on state income taxes, a married couple filing jointly with one dependent child and making $50,000 in 2007 would save $3,961 over the 2005 rates. In this example, $3,500 would come from the larger deduction and $461 from the lower rate.
Sticking with the $50,000 income, a head of household with one child would deduct $2,125 more in 2007 than in 2005 and save $293 on the tax rate; a single person would save $750 and $439, respectively.
The Jimenez family's actual savings would differ but they, like most taxpayers, stand to save thousands of dollars between the two kinds of reductions. Carlos was happy to hear of the tax cuts, but realized the money wouldn't come like some big lottery payment.
The savings will show up on their paychecks and they'll spend it on gas and groceries and everyday things, he said.
"Realistically," he said, "we'll spend it here and there and put it back in the economy."
House Speaker Todd Hiett, R-Kellyville, said Oklahomans will save $6 billion over the next 10 years from the various tax cuts agreed upon this month. The Legislature went to special session primarily because the Republican-led House and Democratic-led Senate couldn't agree on a tax-reduction package during the regular session.
Hiett and Senate President Pro Tempore Mike Morgan, D-Stillwater, finally struck a deal June 15, which led to the Legislature this week returning to special session.
The top state income tax rate will fall from the current 6.25 percent to 5.25 percent by 2010. Republicans hoped to lower it to 4.9 percent.
The standard deduction on income for state taxes will rise gradually to the federal level. Morgan, who has said he preferred no tax cuts, ultimately suggested raising the deduction, saying it would be more fair to low- and moderate-income taxpayers.
The agreement also includes a phase-out by Jan. 1, 2010, of the estate tax that Republicans have spent years trying to end.
The reductions, detailed in House Bill 1172XX, hit a snag Friday when Sen. Glenn Coffee, R-Oklahoma City, introduced an amendment to eliminate the estate tax July 1, 2007. After holding the bill over that morning, the Senate later approved the bill without Coffee's amendment, 43-4.
Those voting no were Democrats Bernest Cain and Constance Johnson of Oklahoma City, Judy Eason McIntyre of Tulsa, and Jeff Rabon of Hugo.
Hiett was thrilled June 15 when he announced the largest tax cuts in state history, saying the $600 million average per year dwarfs last year's $150 million reductions.
Some, including Morgan, wondered how the state will pay for state services and agencies in future leaner years with less tax revenue. Hiett has said the cuts will boost Oklahoma's economy and keep the state in sound financial shape.
Carlos Jimenez, who observed the Legislature with his family Friday morning, believes the state raises more than enough to absorb the tax cuts.
"They were giving $150,000 to some theater," he said. "Private business shouldn't be funded by the state. We were just here today for an hour -- there's no telling what happens here day in and day out. Officers should be paid more and teachers need to be paid more, but they can definitely cut spending."
James S. Tyree is CNHI News Service Oklahoma reporter.
CNHI News Service
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