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SQ 766

UPDATED: 11-02-12

State Question 766 is a statewide measure on Oklahoma’s November 2012 ballot.

This measure amends a section of the state constitution, which exempts some intangible personal property from ad valorem property taxation — a state tax imposed on the value of property.

A ‘yes’ vote on SQ 766 means Oklahoma would exempt all intangible personal property from ad valorem property taxation starting Jan. 1, 2013. A ‘no’ vote means Oklahoma would continue to levy taxes on at least some intangible property.

What is “intangible personal property,” anyway?

It’s property whose value is derived not from from its physical characteristics, but from what it represents. If SQ 766 passes, the following examples of intangible personal property would not be taxed:

  • patents, inventions, formulas, designs, and trade secrets;
  • licenses, franchise, and contracts;
  • land leases, mineral interests, and insurance policies;
  • custom computer software;
  • trademarks, trade names and brand names.


In theory, all Oklahoma companies are supposed to pay intangible property taxes. In practice, however, such taxes are only levied on “centrally assessed” companies, a small category of businesses that includes telecommunications companies, airlines and utilities.

One of those centrally assessed companies, Southwestern Bell, filed a lawsuit over Oklahoma’s intangible property tax.

In the lawsuit, the company argued it should have been exempt from intangible property taxes, including those levied on customer lists, databases, licensed software and trademarks. In the 2009 lawsuit, Southwestern Bell contended:

(1) the Legislature’s failure to make intangible property a classification of property, (2) the text of Okla. Const. art. 10, § 8, and (3) certain statutes governing the assessment of property, demonstrate that all intangible property is exempt from ad valorem taxation.

The Supreme Court disagreed, and reaffirmed that all companies should have to pay the intangible property tax. The court :

Despite a thoughtful analysis and cogent argument, Southwestern Bell has failed in its burden to demonstrate that it is entitled to an exemption for its intangible property, other than the intangible personal property specifically exempted by [the state constitution.] Southwestern Bell has likewise failed to persuade this Court that the State Board of Equalization is limited to considering only real property and tangible personal property in assessing a public service corporation’s property … Intangible property not exempted by the Constitution is taxable …

Court Ruling’s Effect

Allowing the taxation of intangible property might have raised taxes on scores of Oklahoma companies, which worried lawmakers.

There was also concern that the ruling might mean everyday Oklahomans could see new taxes. The Oklahoma Council of Public Affairs worried that teaching certificates, or any kind of business license might be subjected to taxes on their intangible value.

The question of assessment raised other concerns. Oklahoma County Assessor Leonard Sullivan says taxing all intangible property is a bad idea, and that his office doesn’t have the expertise to evaluate the worth of things like logos and trademarks.

“First thing, I don’t have the expertise to tell you how much Sonic’s name is worth, and I don’t know anyone who has that knowledge,” Sullivan tells StateImpact. “I think I have as much expertise as any assessor in the United States, and I wouldn’t know how to put a value on Sonic’s name and logo.”

To allay concerns, state lawmakers in 2010 passed Senate Joint Resolution 61, a stopgap measure to keep intangible property tax issues from expanding. In lieu of paying intangible property taxes, a $25 business activity feewas levied on non-centrally assessed companies for fiscal years 2010-2012.

Enter the State Question

The business activity fee was never meant to be a permanent solution. In 2012, State Sen. Mike Mazzei and Rep. David Dank, both Republicans, proposed SJR 52, the framework for SQ 766. If SQ 766 passes, the business activity fee will expire.

But if it fails, the business activity fee will continue in leu of intangible property taxes, though county assessors will have the clear authority to impose them unless the legislature takes some other action.


The State Chamber of Oklahoma, as well as local chambers, are pushing hard for the passage of SQ 766. Gov. Mary Fallin, the Oklahoma Farm Bureau, and popular conservative blogger Michael Bates are pushing for a ‘yes’ vote, too.

In a $500,000 television campaign that started in early October, the Chamber group calls a tax on intangible property a “tax on ideas,” and paints a very bleak picture of the potential tax burden if intangibles aren’t exempted. From a Yes on 766flyer:

Virtually every family or business in Oklahoma owns some type of intangible property. Small businesses often create and acquire intangible property without even realizing it. Placing a new tax on these thoughts, ideas and relationships will hurt Oklahoma’s entrepreneurs and innovators.

The Chamber says the failure of SQ 766 could mean massive new taxes on people who have never paid them before and that would be devastating for the business environment in Oklahoma. Centrally assessed companies, too, want SQ 766 to pass, as they would no longer have to pay the intangible property taxes they have been paying for years.


Some public school administrators and local government entities, like fire and police departments, are against the passage of SQ 766. They depend on funding from ad valorem taxes, as Garfield County Assessor Wade Patterson told the OK-SAFE blog.  If SQ 766 passes, it would have very “tangible consequences” on Oklahomans, David Blatt of the Oklahoma Policy Institute writes:

While seemingly a simple question, SQ 766 has widespread implications that could drain tens of millions of dollars from schools, fire and police protection, and other vital services, while potentially boosting homeowners’ property taxes.

Norman Public Schools Superintendent Joe Siano says common education suffered terribly during the state budget crisis and this is just piling on. He spoke to The Norman Transcript last month:

“State Question 766 alone would have about a $600,000 impact on schools and it’s about a $33 million impact to public schools in general,” You can take each one of these tax reductions independently and say, ‘that’s not going to hurt very much,’ but when you take them together and couple it with the fact that schools are being funded at less than 2008 levels, I think you’re facing a critical problem.”

Siano’s numbers back up what the Oklahoma Tax Commission told the Tulsa World‘s Randy Krehbiel about the potential lost revenue if the initiative passes, though the OTC hasn’t even ballparked the amount of new revenue that could be generated if SQ 766 fails.

StateImpact’s 2012 Ballot Question Handbook

Oklahoma’s economically important state and county ballot questions — explained.

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