MuskogeePhoenix.com, Muskogee, OK

Oklahoma News

February 5, 2013

Fallin calls for smaller tax cut

— OKLAHOMA CITY (AP) — Oklahoma Gov. Mary Fallin called for a modest cut to the state's income tax rate in her State of the State address to legislators Monday, a year after they refused to embrace her plan to sharply reduce income taxes and eliminate popular deductions and exemptions.

In a departure from last year's bold proposal, when she unveiled a major overhaul of the state's tax code and a nearly 2 percentage point cut to the top rate, Fallin this year is proposing a one-time cut of 0.25 percent beginning in the 2014 tax year. Her proposal would drop the rate from 5.25 percent to 5 percent for most tax filers in Oklahoma and cost the state $125 million when fully implemented in 2015, according to the Oklahoma Tax Commission.

"This proposal gives us the flexibility we need to ensure that we are reducing taxes responsibly, without starving government," Fallin said in her 50-minute address to House and Senate lawmakers. "This is not the last tax cut you will see from my administration. I am serious about lowering taxes, and I will work to get our taxes even lower and to help us be even more competitive so that our neighbors to the north and to the south won't be taking jobs from Oklahoma."

Based on estimates from Fallin's office, the tax cut would result in a $40.7 million reduction in available general revenue for the upcoming fiscal year and about $106 million in general revenue next year. The additional $20 million in lost revenue projected by the Tax Commission comes from income tax revenue dedicated specifically to other funds. Oklahoma's top income tax rate applies to individuals who earn more than $8,700 annually or married couples who earn more than $15,000.

Fallin's proposal to slash the income tax drew immediate criticism from Democrats who maintain it will eliminate a critical source of revenue for state programs.

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