Weekly Opinion Editorial

GRADED ON THE CURVE!
by Steve Fair

Will Rogers said about taxation: “If you make any money, the government shoves you in the creek once a year with it in your pockets, and all that don’t get wet you can keep” Oklahoma taxpayers need to start leaving their money on the bank according to Art Laffer, a former Reagan economic advisor. Laffer spoke in Oklahoma City last week and encouraged the state legislature to look at eliminating the state’s personal income tax over the next ten (10) years. He said that “no matter how you slice it, states without income taxes perform better than those with an income tax.”

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In conjunction with Laffer’s appearance, the Oklahoma Council of Public Affairs, a conservative think tank, released a report on Oklahoma’s state income tax prepared by econometrics firm Arduin, Laffer & Moore, of which Dr. Laffer is a co-founder. The report estimated the average Oklahoma family of four would see a savings of more than $1,300 a year if the individual income tax were phased out. You can read the entire report at http://ocpathink.org/articles/1598

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According to Taxfoundation.org, Oklahoma's state and local tax burden is currently estimated at 8.7% of income (37th nationally). That is below the national average of 9.8%. Oklahoma taxpayers pay $3,259 per capita in state and local taxes.

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Laffer was quick to point out that Texas doesn’t have a state income tax. “When you're looking at your neighbors down to the south,” Laffer said “how do you compete with them? You're not competing with them.”
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Not everyone agrees with Laffer about supply side economics and the elimination of the state income tax. The Oklahoma Policy Institute published an issue brief entitled, “The Case for the Income Tax,’ which lists eight reasons why the state should not eliminate the state income tax. The first reason is that the tax provides nearly one third of the state’s income. They write, “The state could not provide basic, essential services without income tax revenue unless other taxes were drastically increased.” You can read the entire brief at http://www.okpolicy.org/files/TheCaseForTheIncomeTax.pdf
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Republican State Treasurer Ken Miller, an economics professor and former state House budget chair, appears to agree and says state lawmakers should proceed with caution. “We have to have a conversation based on facts and not ideology,” Miller said. . “I don't think you can take your single largest source of revenue and eliminate it and not replace it,” he said.
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I disagree! The state can afford to eliminate the income tax and here is why:
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First, Oklahoma state government already gets too much of our hard earned money. The state budget has grown 16% in the past ten (10) years to over 6.5 billion annually. The tax money state government collects is often spent inefficiently and irresponsibly. Not sending the government money appears to be the only solution to stopping overspending. Eliminating a substantial amount of their revenue stream- like state income tax- would force them to evaluate the operation. Oklahoma government could certainly stand to tighten the belt a lot.

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Second, Laffer’s theory of supply side economics has been proven to work. That means the amount of tax revenue wouldn’t decrease by the full amount and in fact could increase. When Reagan advocated reducing taxes during a major recession in the 1980s, many laughed at the Gipper, but it worked. Supply-side economics, also known as trickle-down economics, provided the private sector stimuli that resulted in increased consumer spending. Over time, the boost to the nation’s economic growth generated a larger tax base, which made up for the revenue lost from the tax cut. Even if the elimination of the income tax cost state government revenue, would that be a terrible thing? Oklahoma lawmakers and leaders should be trying to streamline government by consolidating and evaluating.
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Third, what about an individual taxpayer’s ‘essential services?’ Many Oklahoma taxpayers are doing without so they can pay their taxes. It’s their money! They should be enjoying the fruits of their labor, not funding a giant government money pit. State government does have some ‘essential services,’ but what some lawmakers consider ‘essential,’ taxpayers may consider ‘excessive.’ Robert Half said, "People try to live within their income so they can afford to pay taxes to a government that can’t live within its income."
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Laffer is known for his 'bell curve'(pictured above) which he uses to illustrate the concept that taxable income will change in response to changes in the rate of taxation. When graded on the curve, Oklahoma state government fails. We should eliminate the state income tax.