Wednesday 23 Jul
 
 
 photo BO-Button1_zps13524083.jpg

 

OKG Newsletter


Home · Articles · Opinion · Commentary · Point: Wealthy surcharge
Commentary
 

Point: Wealthy surcharge


Kurt Hochenauer March 12th, 2009

One part of the solution to Oklahoma's budget dilemma is simple: The state government should raise taxes on the state's wealthiest income earners. Obviously, this won't happen for a variety of poli...

One part of the solution to Oklahoma's budget dilemma is simple: The state government should raise taxes on the state's wealthiest income earners.

Obviously, this won't happen for a variety of political reasons. But the fact income tax hikes or surcharges on the wealthy aren't a major part of the state budget debate is fiscally irresponsible and could prove damaging to Oklahoma's overall economy over the next two years.

Faced with an estimated $400 million budget shortfall after the state receives its federal stimulus money, some legislators still want to cut taxes. As revenues decline, the Legislature could actually worsen the budget problem, forcing eventual budget cuts that could lead to layoffs and fewer educational opportunities for state residents. 

One bill passed by the Senate would eliminate state taxes on groceries, which could cost the state $44 million in the first year, according to news reports. Another bill would drop the income tax rate from 5.5 to 5.25 percent in 2010, which would drop revenues by another $44 million. The bill removes an earlier legislative requirement that the 5.25 rate would not go into effect unless there was 4 percent revenue growth.

These proposed measures are illogical given the state's current financial circumstances, although eliminating grocery taxes would have merit during better fiscal times.

The Legislature also has a basic fiduciary responsibility to look at ways to raise state revenues in bad economic times, and that means tax hikes should become part of the public discussion.

Many people will claim it's futile to even broach the subject of raising taxes because it takes a three-quarters supermajority of both the House and Senate to approve tax increases in Oklahoma. (A simple majority can place the measure on the ballot.) Republicans control both chambers, and it's incredibly unlikely they or most Democratic legislators would support tax hikes.

But other states, such as California, are raising taxes to avoid layoffs of state workers and teachers. Wisconsin Gov. Jim Doyle, for example, has proposed taxing those who make $300,000 or more in his state an additional 1 percent. The tax hike would not affect 99 percent of the state's residents, according to Doyle.

A tax surcharge on the top 1 percent of the state's wealthiest income earners could help stabilize the government budget over the next two years and not affect the taxes of virtually any Oklahoma workers. The state should also consider increasing its capital gains tax.

Would the state's wealthiest citizens, who make their money on the backs of hardworking Oklahomans, accept the increases without a fight? It appears unlikely. But if economic conditions worsen in Oklahoma, it may take major tax changes to prevent layoffs and keep educational systems funded.

George Kaiser, the billionaire Tulsa oil and gas producer, recently argued the state should end subsidies to his industry and give the money to education, health care or other tax cuts, according to a news report. These subsidies, which totaled $300 million over the last four years, do little to increase economic activity, Kaiser said.

Kaiser's selfless views on this issue should be commended. As the nation faces its greatest financial crisis since the Great Depression, the wealthiest people among us need to invest more in the communities that made them rich. 

Hochenauer is an English professor at the University of Central Oklahoma and the author of the progressive political blog, Okie Funk: Notes From The Outback, www.okiefunk.com.

 
  • Currently 3.5/5 Stars.
  • 1
  • 2
  • 3
  • 4
  • 5
 
 

 

 
 
 
Close
Close
Close