Oklahoma’s income tax is one of the largest sources of revenue for the state. As such, it is often one of the first places those seeking to grow government look for more revenue. During the state’s last recession, despite the fact that oil prices plunged, income tax cuts were repeatedly cited as the reason for the state’s shortfalls. But as I’ve pointed out before, those playing this blame game fail to acknowledge how money walks.
It turns out that even in good times there are some who still believe more revenue is needed. With Oklahoma’s state revenues reaching historic highs throughout 2019 and early 2020, a few bills were filed to raise the income tax. HB 1453, HB 3042, and HB 3138 all sought to increase the income tax paid by Oklahomans.
It is a basic principle that the more you tax something the less of it you get. So, taxing a person’s income disincentivizes work. Whether the economy is growing or shrinking, less work is never a good thing. And in the wake of the COVID-19 shutdown, with unemployment reaching record levels, another penalty on work would have been disastrous.
[This is one in a series of articles about legislation included on OCPA’s 2020 legislative scorecard.]