The last push for income tax repeal came a decade ago under Gov. Mary Fallin. Borrowing from a report produced by supply-side guru Arthur Laffer for the Oklahoma Council for Public Affairs, Fallin claimed that repealing Oklahoma’s personal income tax would unleash such strong economic growth that the state could somehow still balance its budget without raising other taxes or cutting services.

My organization at the time, Oklahoma Policy Institute, labeled the idea that the state could eliminate its single largest revenue source — one that accounts for one in three tax dollars used to support public services — without having to slash budgets or raise other taxes “the ice cream diet” fantasy.

The metaphor came from Laffer-critic Jay Bookman, who wrote, “It’s like telling someone with an obesity problem that the best way to lose weight is to always eat more ice cream — more times than not, their eagerness to believe overwhelms any skepticism.”

Laffer’s lofty promises were quickly and decisively debunked by national and local economists, who showed that lowering or repealing state personal income taxes does not result in greater economic growth.

The Legislature, to its credit, rejected Fallin’s tax plan, although it did subsequently lower the state’s top income tax rate by more modest increments.

Nonetheless, while bad policy ideas can sometimes be put down for a nap, rarely are they laid entirely to rest, especially when the ideas would pad the bottom line of the wealthy and powerful. Proponents of income tax repeal are back telling us that to compete in attracting investment and migration, Oklahoma must join states like Tennessee and Texas that have no income tax.

There are several fundamental flaws with this argument.

First, every state must raise tax revenue somehow. To make up for the lack of an income tax, Tennessee residents pay the second highest combined state and local sales tax rate in the nation – 9.55%, according to the Tax Foundation. Texas has no personal income tax, but the average Texan pays well over twice as much in property tax as the average Oklahoma.

In fact, Texans pay higher overall taxes as a share of personal income than do Oklahomans.

Secondly, it’s just not the case that states that don’t have an income tax economically outperform those that do. For example, a careful 2012 study by the Institute on Taxation and Economic Policy found that states with high income tax rates saw greater economic growth per capita than did the states without a broad-based personal income tax over the prior decade.

Similarly, state tax rates have been shown to have a negligible impact on Americans’ interstate migration flows; people who move are nearly as likely, and in some cases more likely, to move from low-tax states to high-tax states as in the other direction.

Thirdly, while one can always cherry-pick examples of a company choosing to relocate to a state without an income tax, state tax rates consistently rank way down on the list of the factors that companies cite for their decisions about where to locate. Particular incentive packages, including tax breaks, may be part of the overall mix that an Amazon or Panasonic weighs in choosing where to invest, but the main things most businesses consider are a trained workforce, physical infrastructure, access to markets, transportation networks and quality of life.

A 5% state income tax simply is not a determining factor.

The reality is that Oklahoma is already in the bottom fifth of states for overall taxes. Partly because of meager revenue collections, we already struggle to pay our teachers, ensure affordable access to college, maintain decent roads and bridges, support our public health systems, and maintain law and order.

Eliminating the income tax doesn’t get us closer to any of those goals or put us on a path to become a thriving state, one that provides opportunity and security for all our residents.

David Blatt, who holds a Ph.D. in government from Cornell University, teaches public policy in the Master of Public Administration program at the University of Oklahoma–Tulsa. Previously he was executive director and a tax and budget analyst for Oklahoma Policy Institute.

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