Oklahoma House allows cut in income tax rate from 5.25 percent to 5 percent

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OKLAHOMA CITY — A planned cut in Oklahoma's personal income tax rate will go into effect next year as scheduled after the Oklahoma House Monday soundly rejected a proposal that would have blocked it as the state grapples with a $611 million budget hole.

The Republican-controlled House voted 72-28 along partisan lines against an amendment by House Democratic Leader Scott Inman of Oklahoma City that would have set aside the reduction in the state's income tax rate from 5.25 percent to 5 percent, beginning in January.

Inman filed the proposal as an amendment to legislation that dealt with tax liens and said the state could not afford to cut income tax revenue while it works to fill a budget shortfall for the fiscal year that begins July 1.

"You don't have enough money to fund core functions of government," Inman said during debate on the amendment. "Let's get our fiscal house in order."

Passed by the Republican-controlled Legislature last year and signed into law by GOP Gov. Mary Fallin, the tax cut reduces Oklahoma's top personal income tax rate to 5 percent in 2016 with a further cut to 4.85 percent possible two years later if certain revenue conditions are met.

The Oklahoma Tax Commission has calculated that the cut will reduce state revenues by $57 million in 2016, $147 million in 2017 and almost $200 million in 2018.

But Inman said the average Oklahoma taxpayer will receive little benefit from it. Officials say the average tax filer will save about $85 a year.

Inman also said income tax cuts approved by the GOP-dominated Legislature over the past decade are partially responsible for the state's current budget hole and are affecting the level of state services. He said there are 400 fewer correctional officers today than in 2008, and public education has endured deep cuts resulting in teacher shortages statewide.

"I'm just trying to stop this fiscal insanity," Inman said.

Supporters of the tax cut said taxpayers deserve to keep more of the incomes they earn. Rep. Leslie Osborn, R-Mustang, said people have more money to spend when taxes are low, helping to stimulate the economy.

"We will see increased revenues," Osborn said "It's not our money. It's not the government's money."

After defeating Inman's amendment, House members quickly passed the bill by a vote of 99-0.

Online: House Bill 1778: http://bit.ly/1AXBoXg

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