| August 20, 2013
Oklahoma’s income tax cuts: a growth story
Recently, OCPA released a new memo (a short read, with visuals) detailing the success of Oklahoma’s income tax cuts since 2005.
Couple this with Oklahoma’s data from the “How Money Walks” project (click here for the map, click on Oklahoma, then notice how the trajectory of adjusted growth income – AGI – moving in and out of the state swings upward for Oklahoma starting in 2005). Then the correlation becomes very strong, indeed: as income tax cuts have helped propel Oklahoma’s private-sector economy, overall state tax revenues have risen to record highs. (See more in the latest issue of Perspective.)
This also matches up with data from the American Legislative Exchange Council’s Rich States, Poor States, which shows no-income-tax states with higher rates of tax revenue growth than high-tax states.
In the recently ended fiscal year, Oklahoma set new record highs for total tax collections, including record highs for both income tax and sales tax collections. This, despite a total reduction of 20 percent in the state’s personal income tax rate since 2005, and despite natural gas prices – and natural gas revenues – currently far below past highs.