Measures moving through the state House of Representatives would phase out the corporate income tax over five years. Another proposal seeks to lower the 5% top income tax rate.

House Speaker Charles McCall, R-Atoka, is backing both measures, saying they would increase investment in the state.

In Oklahoma, it takes a supermajority of both chambers to increase a tax, so there is often a reluctance to decrease taxes because of the difficulty of reinstating them if the need arises. But McCall said the bills currently being considered are structured so that only a simple majority would be needed should the state need to reverse course.

Rather than an actual reduction in the tax rates, “the corporate relief is a deduction, and the personal relief will likely be a credit,” said John Estus, a spokesman for McCall.

“Deductions and credits can be modified with simple majority votes, as opposed to supermajorities for tax rates. This offers protection for unforeseen events and core government services.”

During Gov. Mary Fallin’s last term in office, lawmakers struggled to increase taxes to pay for a teacher pay raise. Ultimately, raises were granted.

“The speaker does not want future legislatures to face the steep supermajority vote requirements he and his colleagues faced three years ago while making those historic education investments,” Estus said.

“These tax relief plans are designed to increase state revenue by stimulating the economy, which will allow for further investments in necessary services.”

But Senate Appropriations Committee Chairman Roger Thompson, R-Okemah, expressed concern that tax cuts would negatively affect state revenue.

“I am still very concerned about cutting our revenue in this unstable economic environment,” said Thompson. “We have got several needs throughout the state that need to be addressed.”

As federal stimulus dollars dry up, Thompson is concerned that fiscal year 2023 could be difficult.

Senate Minority Leader Kay Floyd, D-Oklahoma City, said she was quite surprised to learn of a tax cut proposal.

The state doesn’t know how the COVID-19 pandemic and new strains of the virus will affect Oklahomans, she said. In addition, the state must come up with $164 million to pay for Medicaid expansion, she said.

Finally, proposed changes to the state’s funding formula for education could mean several school districts will have significantly less to spend, Floyd said.

“Why on earth would we try to limit what revenue stream we have when we have these huge challenges before us?” she asked.

Oklahoma Education Association President Alicia Priest said cutting taxes was what got the state in trouble in the first place.

“How can we support our core services if we continuously cut taxes?” Priest asked.

State Chamber President Chad Warmington said he is glad McCall is at least starting the conversation.

Oklahoma needs to be competitive to attract companies that are fleeing states with high taxes and that have not handled COVID-19 well, Warmington said.

“I think the moment is right for this conversation and action on this,” he said.

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