Cockroft Column: Income Tax Elimination Does Not Mean Property Tax Hikes

By now, some of you have probably heard about the recently released plan from the Oklahoma Council of Public Affairs and former Reagan economic adviser Arthur Laffer to eliminate the State income tax in Oklahoma. This issue has been under discussion for some time now, and I’m extremely pleased that it is now gaining traction. There will be much attention drawn to this issue during this legislative session. The plan shows the positive economic impact that Oklahoma would experience if the state’s progressive income tax were to be phased out in the next 10 years.

The plan claims that by phasing out the income tax in steps the state could incorporate the benefits of the resulting positive economic impact into the state budget, therefore not have to resort to tax increases of any kind to make up for the loss of revenue.

This point is especially important. I have found that the number one reason some fear the elimination of the income tax is due to their even stronger dislike of the property tax. Senior citizens have especially disliked the property tax because it threatens to force them out of the home they have worked all their lives to pay off.

One common argument is that these fears can be traced to the fact that Texas has high property tax rates. Whenever someone mentions the fact that Texas has no state income tax, the comment is almost always followed by someone else describing how Texas has an unfriendly property tax policy.

However, I strongly believe that a huge component of property tax reform and reducing property tax rates can be accomplished by eliminating the state income tax.

In Oklahoma, state government does not have a statewide property tax. Property taxes are collected from each county where it is mostly distributed to local schools and CareerTech, as well as a small percentage going to county government. Local governments also sometimes use the property tax to fund the creation of real property capital assets such as new buildings.

So you’re probably asking, “How does the elimination of the income tax assist with property tax reform?”

According to the OCPA study, the elimination of the state income tax would result in significant amounts of increased economic activity. This activity would increase the income of Oklahomans by nearly $50 billion. When this money is spent, sales tax collections would increase local government revenue by $3.5 billion. With the increased sales tax collections, fewer local governments would need to ask for property tax increases to build their real property assets.

In fact, it would be possible for policymakers to capture some of this increased revenue by creating a property tax rebate fund and channeling some of the new growth income into the fund. The fund could be used to rebate property tax income to counties and schools as a result of new decreased property tax rates.

In addition, State law requires that in order for there to be an increase in taxation at the State or local level, it must be brought before a vote of the people. With our economy in the shape it’s in, no reasonable community would wish a property tax hike upon themselves. 

When the government has the courage to use tax reform to allow its residents to keep their money, that money will be used to provide jobs and economic activity. This expands the tax base and makes even more tax reform possible. It’s a win-win situation: Our economy is given a boost, and State government continues to provide responsible decisions. 

Eliminating the income tax should be viewed as an important step in the effort to reduce property tax rates.If you have questions or need help, contact my office at josh.cockroft@okhouse.gov or (405)557-7349. You can find me on Facebook and @votecockroft27 on Twitter.

Governor Fallin Statement Regarding Boeing Relocations from Wichita to Oklahoma City

OKLAHOMA CITY - Governor Mary Fallin today released the following statement regarding The Boeing Company’s decision to close the Boeing Defense, Space and Security facility in Wichita and to transfer engineering operations to Oklahoma City:

“This is a difficult time for Boeing employees who have been impacted by the decision to close the Wichita facility, and my heart goes out to those men and women. However, as with the recent relocation of Boeing staff from California to the Boeing Oklahoma City facility, our state stands ready to welcome all employees and their families who will now call Oklahoma home. Oklahoma City is a wonderful community and a wonderful place to live, work and raise a family. I know Boeing employees will agree.”

“My administration has worked very closely with The Boeing Company to ensure that Oklahoma has both a competitive business climate and a high quality of life for any employees that might be located here. It’s a tribute to Oklahoma’s progress and forward momentum that we have been chosen as a relocation site.”

Merry Christmas, Happy New Year

Merry Christmas, Happy New Year

By State Rep. Josh Cockroft

I would like to begin this holiday column by thanking the constituents who have elected me to represent them at our state Capitol. I am constantly honored and humbled by your trust. Lawmakers will soon meet again for the legislative session in February and we have already been busy preparing ourselves.

House republicans attended a caucus meeting in which we discussed the details of our party’s agenda for the 2012 legislative session. Although we are all conservatives, each of us represent districts that vary in their priorities. We caucus together to try and resolve these differences so that we do not have to spend as much time debating amongst ourselves during the session.

We are in the process of filing legislation for the 2012 legislative session. The first step is to file bills without detailed legal language. Then, we consult with our legal staff to ensure the appropriate legal jargon is used to convey our intent. Laws are open to scrutiny and interpretation by Oklahoma’s judicial branch so it’s very important that we get the language just right.

I am looking forward to the challenges of the 2012 session. I believe that there is the political willpower to begin the process of phasing out the income tax. I will begin running my regular column again in January to keep you informed on what your lawmakers are doing.

The military men and women who protect our liberties and provide for our safety must regularly forgo the comforts of this holiday season. Firefighters, emergency responders and members of law enforcement also regularly work on Christmas to ensure the safety of their communities. I would like to thank you for your service and your protection.

I wish everyone a joyous Christmas and a wonderful New Year. As always, I would love to hear from you. I can be reached at the Capitol at (405) 557-7407.

Governor Mary Fallin Wishes Oklahomans a Merry Christmas and Happy Holiday Season

OKLAHOMA CITY – Governor Mary Fallin today issued the following statement wishing Oklahomans a Merry Christmas and happy holiday season:

“The Christmas and holiday season is a special and wonderful time of year. I am looking forward to spending the next few days with my family, celebrating the meaning of Christmas, and reflecting on the many wonderful gifts bestowed on us by God. I want to wish all Oklahomans a Merry Christmas and a wonderful, joyous holiday season on behalf of my entire family.” 

Note:  The Governor’s office will be closed on Monday, December 26 and Tuesday, December 27 in observance of the Christmas holiday. 

Task Force Endorses Tax Credit Transparency, Pre-Approval Process

OKLAHOMA CITY – Members of the Task Force on State Tax Credits and Economic Incentives voted today to require greater tax-credit transparency and mandatory pre-approval for those seeking tax credits.

            Those recommendations, along with several other reforms endorsed at previous meetings, will now be presented to the governor and legislative leaders.

            “There is a general consensus here that says tax incentives that create real, lasting jobs are worthy, while those that fail that basic test are not,” said state Rep. David Dank, an Oklahoma City Republican who chairs the task force.

            In calling for greater transparency, Dank noted that it had become clear that until recently “few members of the Legislature had even the dimmest concept of how many tax credits we had on the books, how much they cost or even where they were going. The taxpayers certainly didn’t either.”

            He endorsed a system of reporting that will ensure that “everyone involved sees and knows exactly what is going on and what is at stake, down to a dollar-by-dollar accounting of where these credits and incentives are going and what they are achieving.”

            In calling for a pre-approval process, Dank noted that the current system for obtaining many tax credits seems “to be almost automatic” with no future cross-checking for re-approval process for recipients.

            “If I go down to buy a car this afternoon, it doesn’t matter that I bought one ten or twenty years ago,” Dank said. “I’m going to have to be pre-approved before I drive that care off the lot. The same rules should apply to tax incentives.”

            The task force voted to include both recommendations in their final report.

            The group has previously endorsed elimination of transferable tax credits and called for mandatory fiscal impact reports on all tax credits, caps on tax credits, annual audits of tax credit programs, routine analysis of each credit’s effectiveness at permanent job creation, and expiration dates for all tax credit programs with the option for legislative re-authorization.

            The group also endorsed a prohibition on hearing tax-credit bills during the final hectic days of the legislative session.

            Although elimination or restriction of many tax credits programs will likely draw strong opposition from the groups that have benefited from them, Dank urged lawmakers to consider the bigger picture.

            “Starting right now, remind yourself every day that the only lobbyist that counts is the people who elected us,” Dank said. “They may not hang around in the halls here at the Capitol, but they are here in spirit.”

            The Task Force on State Tax Credits and Economic Incentives’ final report will be submitted to legislative leaders and Gov. Mary Fallin by Dec. 31. The report will be used to craft legislation for the 2012 legislative session.

Governor Mary Fallin Comments on Certified Revenue Figures

OKLAHOMA CITY – Governor Mary Fallin today issued the following statement on the Oklahoma Board of Equalization certified revenue figures. The governor will have $6.5 billion to craft her FY 2013 budget, an increase of $120.3 million over the previous year.

 “The numbers certified by the Board of Equalization today indicate that tax revenues are increasing as Oklahoma’s economy continues its rebound from the national recession. That’s the good news. The loss of one time funding sources, however, means the state is currently facing an estimated budget shortfall of $150 million. While that number may change, the bottom line is that next year’s budget will be flat at best. Moving into 2013, state agencies should redouble their modernization and efficiency efforts to ensure they are maximizing the value of their appropriated funds and saving taxpayer dollars.”

Fallin Praises New Plan to Reduce Prescription Drug Costs for HealthChoice Members

OKLAHOMA CITY – Governor Mary Fallin applauded an action taken today by the Oklahoma State and Education Employees Group Insurance Board (OSEEGIB) that will save taxpayer dollars and reduce prescription drug costs for thousands of consumers in Oklahoma. The plan was originally submitted by the Pharmacy Providers of Oklahoma (PPOk) as a way to reduce prescription drug costs while retaining a level playing field between local independent pharmacies, chains and mail service pharmacies. Total savings are estimated at $13.1 million per year for the state, as well as a total of $19.8 million in total savings for the 163,000 thousand prescription drug consumers currently enrolled in Health Choice plans.

Under the new proposal, Oklahoma pharmacists will offer deeper discounts on all drugs for Health Choice Plans resulting in savings to the plan and the members, which include many teachers, state employees, retirees, including all Medicare members, and their dependents. The new plan will result in an estimated 10% reduction in total prescription drug costs for HealthChoice members.

“Today’s agreement is a great example of how government can work with the private sector to find ways to save taxpayer dollars, lower the cost of health care, and support our local businesses,” Fallin said. “I applaud both OSEEGIB and our Oklahoma pharmacists for reaching this agreement and cooperating together on this complex and important issue.”

PPOk CEO Lonny Wilson also praised the new plan.

“OSEEGIB’s decision to accept the Community Pharmacy Proposal is a tremendous win for the Plan, the Participants, the State of Oklahoma, and Community Retail Pharmacies,” Wilson said.  “It provides savings to the plan, lowers total copayments and allows participants to choose the pharmacy of their choice without incurring copayment penalties.  Allowing 90 day dispensing of maintenance drugs from hundreds of community pharmacies provides optimum convenience and access to the many additional services provided by Oklahoma pharmacies.   Our thanks go out to OSEEGIB board members and management for putting Oklahomans first.”