May 18, 2005

Oklahoma Op-Ed

In today's Oklahoman, ITEP's Casey Cabalquinto has an Op-Ed that demonstrates how Republican claims about a regressive tax cut likely to be passed by lawmakers in that state this week are deceptive.

Casey, who in contrast with the writer of the "counterpoint" Op-Ed that appears along side his actually analyzed the legislation in question and addresses it, first demonstrates the problems with the current idea and then goes on to offer a better alternative. Here's an excerpt:
The state House of Representatives has passed a bill that would cut the top income-tax rate from 6.65 percent to 6.25 percent. The bill's sponsor, Rep. Kevin Calvey, claimed in The Oklahoman on April 20 ("Save some $$$ for taxpayers," Opinion) that this income tax cut "will help anyone making more than $10,000 a year." This sounds like a great deal, but it's just not true.

For example, a married family with two children would have to earn $27,000 before they'd see a dime in tax cuts under the Calvey plan. And even for single Oklahoma workers, the tax cut would kick in at $13,000, not $10,000.

Of course, a few wealthy Oklahomans would do quite well under the Calvey plan. The richest 5 percent of income earners would get almost half the tax cut, and the very wealthiest 1 percent would see a tax cut averaging almost $1,700. But the poorest 60 percent of Oklahomans would see a tax cut averaging just $9 -- and more than half of all state residents would get nothing at all from this plan. This is especially worrisome because the tax system is tilted heavily against the poorest Oklahomans.


The good news is that if a $58 million tax cut is deemed affordable -- a very big "if," according to many advocacy groups -- there are plenty of other ways in which lawmakers could provide more meaningful tax relief to working families. Cutting income taxes on the working poor would be a start. Low- and middle-income Oklahoma families use a "standard deduction" that acts as a no-tax floor. In Oklahoma, this deduction is limited to $2,000 -- smaller than the standard deduction allowed by most other states and the federal government, and
much smaller than the itemized deductions typically claimed by wealthier Oklahomans. Increasing the standard deduction would provide a bigger "bang for the buck" than the Calvey plan for most Oklahomans currently paying income taxes.


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