Oklahoma’s Pathway to Fiscal Prosperity

 

Given Oklahoma’s proximity to Texas, one of the nine states in the United States that does not tax personal income, the state was routinely finding itself losing people and jobs to the Lone Star state. All of that started to change in 2004.

That year for the first time in over 80 years, Republicans were able to take over the majority in the House of Representatives. For there, the top priority become to cut the state’s income tax rate.

During that period, Rep. Kevin Calvey was the Revenue Tax Chairman – or as he likes to call it, the “Revenue Reduction and Tax Relief Chairman” – and helped with an income rate reduction, lowered over 20 percent from 2004 through 2009. Over this period of time, the top marginal rate dropped, in a series of four reductions, from 7.00 percent to 5.50 percent and Oklahoma stopped penalizing citizens and job creators for the right to earn a living.

With each drop in the rate, many individuals and organizations in favor of higher government spending rallied against the income tax cuts, claiming income tax cuts would result in less revenue for state government programs.

What actually transpired was that Oklahoma saw an increase, both in economic activity and tax revenues, with each of the income tax cuts implemented between 2004 and 2009. You can look at the How Money Walks IRS data to see this shift.

“It’s the Grapes of Wrath in reverse – people are leaving California for Oklahoma,” Calvey said. And Oklahoma is now often used as an example for what’s right in the Heartland.