The Finance subcommittee OK’d Sen. Dave Rader’s Senate Bill 1086, which would end the state capital gains income tax deduction effective in the 2018 tax year.

A Senate fiscal analysis of the bill shows it would increase state income tax revenue by $120.5 million next year. That would be roughly enough money to fund a $2,100 raise for Oklahoma teachers.

Voters created the tax break in 2004. It was a quiet add-on to a proposal to raise tobacco taxes.

The tax break allows profits from the sale of Oklahoma-based property and stocks to be fully deductible from income taxes if the seller owned the property for at least five years or the stock for at least three years. There is no requirement that the profits be reinvested in Oklahoma.

From 2010 to 2014, the incentive created an estimated $9 million in additional tax revenue while costing the state $474 million, according to a study by PFM, a consultant to the Oklahoma Incentive Evaluation Commission.

The study found that 86 percent of the tax breaks went to residents making at least $200,000 a year.

Despite that evidence, the commission rejected a proposal to ask the Legislature to do away with the incentive.

Kudos to Rader for picking up the issue anyway.

The capital gains deduction isn’t building our economy and shouldn’t be kept on the books. We urge legislative approval of Rader’s proposal to eliminate a wasteful tax incentive and help rebuild state revenue.