Not overtaxed

Editor, the Transcript:

With tax day just behind us, it’s a good time to reflect on the nature of taxation in this country and in Oklahoma.

Consider the U.S. as a whole. Not surprisingly, according to a recent Gallup poll, about half the respondents think their taxes are too high—47 percent. So just how accurate are these perceptions?

The U.S. ranks 47th among all 38 OECD (developed) nations, ahead of only Korea, Chile, and Mexico. Including all taxes, the average OECD nation spends about 38 percent of its GDP (gross domestic product) on taxes. In the U.S, the figure is 28 percent.

From such data, it’s easy to conclude that taxpayers in this country have a good deal. Almost all research shows that the U.S. is a low-tax country.

What about the Sooner state? You can compare states on various measures of taxation. Perhaps the most meaningful of these statistics takes account of ability to pay. According to the Tax Foundation, Oklahoma ranks 40th in the nation on state and local taxes as a percentage of state income. Compared to other jurisdictions, Oklahomans are not overtaxed by their state and local governments.

Now most of us know that the state faces a huge shortfall in revenue for this fiscal year. The common explanation blames the slowing economy, particularly the downturn in the oil and gas sector. Certainly some truth here. But not the whole truth.

In a study recently conducted by a respected Washington think tank, the Institute on Taxation and Economic Policy, income tax cuts over the past decade in Oklahoma reduced this year’s revenue by about $1 billion dollars.

In spite of this budgetary shortfall, the governor and Republicans in the Oklahoma legislature are still pushing for further cuts in the state income tax. David Blatt, director of the Oklahoma Policy Institute, insists that “the tax cut was never intended to take effect under these circumstances.” The Institute has urged Oklahoma lawmakers to repeal this year’s scheduled tax cuts.

In fact, Oklahoma should consider raising taxes, not reducing them under such dire conditions. State and local public services, especially common schools and higher education, are suffering unprecedented hardship.

Almost no one wants their taxes increased, but the state really is in crisis mode.

DAVID R. MORGAN

Norman