Sen. Patrick Anderson is urging state leaders to think outside the box when considering ways to lower the income tax. Hes advocating passage of Senate Bill 240 which would replace the current state income tax with a 2.95 percent flat tax. Anderson originally introduced the bill in the 2013 legislative session. The bill can still be considered in the 2014 session when it begins in February.
Legislation signed into law last May which would have reduced the states top income tax rate from 5.25 percent to five percent in 2015 was thrown out by the Oklahoma Supreme Court last week for violating the Constitutions single subject rule.
In light of the Supreme Court ruling, this session presents the perfect opportunity to consider a different approach, Anderson said. We also know the state will have less money for core services next fiscal year even as were facing growing expenses. A flat tax would mean greater tax relief for Oklahomans without further reducing the states already limited resources.
SB 240 would eliminate all current income tax deductions, credits, and exemptions. Under the proposal, the state income tax rate would be cut nearly in half; however, there would be no loss of revenue to state government. The Oklahoma Tax Commission reviewed the numbers and determined that a flat rate of 2.95 percent, as Anderson has proposed, would be revenue neutral.
If Andersons flat tax proposal is adopted, Oklahoma would join eight other states which with a flat tax: Colorado; Illinois; Indiana; Massachusetts; Michigan; Pennsylvania; Utah; and beginning January 1, 2014, North Carolina will become the eighth state with a flat income tax rate.
True tax relief requires true tax reform, said Anderson, R-Enid. The flat tax plan is simple, fair, and revenue neutral. I believe this legislation represents a common sense tax cut plan that will enable us to protect funding for core services while delivering significant tax relief.