Experts say Step Up's tax plan raises questions.
OKLAHOMA CITY An outside group lobbyinglegislators for a tax overhaul announced more specifics about its income tax policy pitch on Wednesday, suggesting that updates could generate about $175 million in new revenue. Economists and policy analysts had mixed opinions on theplan, which would lower rates for several households but cap some deductions. Many said the plan, which was encapsulated in a quick-facts sheet, raised many questions: Namely, how does lowering rates lead to so much new revenue? Some of the state's most prominent private-sector executives announced last Thursday they had banded together to build a tax plan while the Legislature stalls in partisan gridlock. The group named itself Step Up Oklahoma. Its plan includes several new revenue streams, including tax increases on oil and gas production, motor fuels and cigarettes. The organization said then it planned to push for income tax reform, but details were unclear. The organization released more information on Wednesday. It summed up some of the changes and how many families would be affected. The top marginal rate would remain at 5 percent. The planwould introduce two new brackets for low-income families and reduce their rates. Single people who make between $7,200 and $17,999 and joint filers making between $12,200 and $35,999 would see their rates drop from 5 percent to 4.6 percent. Single people making between $1,000 and $49,999 and joint filers making between $36,000 and $99,999 would pay 4. percent instead of 5 percent. It would cap the itemized deduction at $22,500, but it would protect the exemption for charitable donations. It would also cap the standard deduction, but the plan doesn't specify where. About 55 percent of Oklahoma filers would see no change to their tax liability, the sheet states. Local economists said there are still several questions to answer before understanding how the plan would generate $175 million. "I just dont see where theyre getting that positive revenue on that scale," said Jonathan Willner, an economist at Oklahoma City University. "There must be a lot more going on in there than I'm seeing." Travis Roach, an economist at the University of Central Oklahoma, said cutting taxes on middle-income families would likely raise some kind of revenue because it would spur economic growth and spending. However, he said, it would be helpful to see what kind of projections analysts used to project the $175 million figure. "Its not that I disagree, that that couldnt happen," he said. "I would like to know." He and policy analysts said those projections are also hard to follow without knowing how many Oklahomans claim the itemized deduction and how common it is for those claims to surpass $22,500. A conservative and a progressive policy analyst each said they want to know whether the plan takes into account federal changes to the tax code. Changes to itemized deductions have made standard deductions more likely for many families, they said. "Obviouslyunder the federal tax cuts, fewer people will itemize," said Trent England, executive vice president of the Oklahoma Council of Public Affairs. "You really have to have that missing piece of the puzzle about the standard deduction to know how that would work." David Blatt, executive director at the Oklahoma Policy Institute, said the plan has some changes that his progressive organization would welcome. "I would start off by saying that it is encouraging to see these business leaders recognize the need for new revenue and to include income tax revenue as a central part of the package," he said. "There certainly seem to be some progressive features to this plan, especially capping itemized deductions, which would be claimed by the highest income earners." He said that making the caps the plan does would generate hundreds of millions of dollars in revenue, and the drops in rates for middle-income filers would offset that. He said the $175 million projection was plausible. However, he said, it shouldn't necessarily be sold as a streamlining overhaul. In some ways, it makes the tax code more complicated than it is now. "It adds two new brackets, it creates a new credit. ... There are much simpler and more straightforward ways to raise equalor a greater amount from the income tax."
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|Publication:||Journal Record (Oklahoma City, OK)|
|Date:||Jan 17, 2018|
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