Oklahoma governor plans to cut state income taxes
OKLAHOMA CITY, Oklahoma |
OKLAHOMA CITY, Oklahoma (Reuters) - Oklahoma's Republican governor announced a plan on Monday to dramatically cut state income tax rates and eventually do away with them altogether, and said the state would pay for the cuts by closing "loopholes."
Speaking to both houses of the state legislature in her annual "state of the state" speech, Governor Mary Fallin called her tax cut plan "a game changer" that would give Oklahoma the lowest state income tax rate in the region except for Texas, which has no state income tax.
Fallin's proposal would simplify Oklahoma's tax structure, reducing the number of tax brackets from seven to three, she said.
Oklahoma's state income tax rate now ranges from a low 0.50 to 5.25 percent, depending on income levels. Under her proposal, the high-end rate would be 3.5 percent and the low rate would be 2.25 percent, beginning in 2013.
As of next year, a married couple earning $40,000 would pay 37 percent less in state taxes, Fallin said. Couples making less than $30,000 would pay no state income taxes at all.
To make up the revenue loss, estimated to be about $350 million, Fallin said the state will eliminate unspecified tax credit "loopholes," cut government waste and capitalize on the economic growth that will be spurred by tax reform.
Democrats criticized the plan, saying that eliminating tax credits would result in a higher tax bill for senior citizens and for families of four with earnings in the $40,000 to $50,000 range.
But even Democrats conceded they do not have the votes in the legislature to derail the plan. Republicans outnumber them by a better than a 2-to-1 margin.
"I think the train has left the station on this - unless the people speak up," said House Democratic leader Scott Inman.
Despite the loss in revenue that would result from the governor's proposed tax cut, she called for increased spending to hire more highway patrolmen, repair 706 bridges, fund teachers' health care, improve the state medical examiner's office and repair the State Capitol building.
(Editing by Greg McCune and Todd Eastham)
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