Senate Passes $402 Million Tax Cut Package

A Democratic proposal that will cut taxes by $402 million over the next four years won approval in the State Senate Wednesday.

The Helping Oklahomans Prosper Economically proposal is targeted to benefit working families, retirees and small business, said Senator Jay Paul Gumm, author of the proposal.

"This isn't another tax cut for the rich. HOPE cuts taxes the most for the people who can afford them the least," said Gumm, a Democrat from Durant.

HOPE lowers taxes on working families by raising the standard deduction on state income taxes for four consecutive years until it is equal with the federal standard deduction. The Oklahoma standard deduction, which hasn't been raised since 1971, is $1,000 for individual filers and $2,000 for a married couple filing jointly. The 2004 federal standard deduction is $4,850 for individuals and $9,700 for married couples filing jointly.

HOPE offers a family of four making $50,000 a year almost $500 in savings on their state income tax.

"After it is fully implemented in 2009, the standard deduction will be tied to increases in the federal standard deduction, offering additional tax savings for working families every year," Gumm said.

Another key component of the HOPE Plan is a back-to-school sales tax holiday weekend in early August.

“In my district and others throughout Oklahoma, people flock across the state line to buy their school clothes and supplies in Texas every year,” Gumm said. “A sales tax holiday will allow parents all over Oklahoma to save money on the items their children must have before school starts and it will keep their back-to-school dollars in Oklahoma.”

Other provisions of the HOPE Plan include: Lowering taxes on retirees by increasing the amount of retirement income that is exempt from state income tax; and eliminating corporate capital gains taxes on the sale of Oklahoma-based assets.

Senate Bill 958 which contains the HOPE Plan passed the Senate 44-2. It now goes to the House for consideration and could be sent to the Governor's desk in a matter of days.

Senate President Pro Tempore Cal Hobson said the plan will be phased in over the next four years. Its impact on the state budget in Fiscal Year 2006 is approximately $15 million. That will increase each year until Fiscal Year 2009 when the tax cuts will total $211 million, making the four-year total $402 million.

"By phasing in the tax cuts, we will still have additional funds to address other needs in the coming fiscal year," Hobson said.

Gumm concluded by saying: “The HOPE plan will strengthen families, boost small businesses, and give every Oklahoman the chance to live up to the full promise our state has to offer.

“It puts money back into the pockets of working families and small business while protecting our investments in public schools, health care, job creation and programs that help our state’s most vulnerable citizens,” he said. “This plan will give Oklahomans real hope to build a better future for our children.”