Intense special interest lobbying to save hundreds of millions in tax credits, deductions and exemptions derailed efforts to cut Oklahoma’s personal income tax, Gov. Mary Fallin tells the Associated Press.
Reducing and ultimately eliminating the income tax was a cornerstone of Fallin and Republican lawmakers’ goals for the 2012 legislative session.
By April, Fallin had conceded the plan would not be adopted because of stiff opposition to eliminating dozens of tax credits for businesses and tax deductions for individuals that would supplement the lost revenue. Alternative plans proposed in the weeks before lawmakers adjourned on May 25 were also rejected.
“Not the most productive way to address tax reform,” Fallin said.
Proponents said cutting the income tax — which amounts for about one-third of revenue for appropriations — would help Oklahoma’s economy grow, and make the state more attractive for business expansion and relocation. Eliminating tax credits and exemptions would have helped pay for the income tax cut, but lawmakers were “swayed” by lobbying from special interests, Fallin tells the news service.
Fallin said she hopes to work with legislators over the summer to build a better consensus on income tax cuts. Tax cut proponents say Oklahoma is losing an economic battle with Texas, which has no state income tax. And competition from the north could intensify the 2013 income tax debate, Fallin tells the AP.
The Republican governor said the success of lawmakers in Kansas in passing legislation to reduce that state’s income tax rate from 6.45 percent to 4.9 percent for 2013 will place more pressure on Oklahoma lawmakers to take action.