A plan to double the corporate income tax - from the current 4 percent up to 8 percent on a sliding scale for the state's high-earning firms - was part of the compromise agreement reached late Monday by Gov. George Nigh, House Speaker Jim Barker, and Senate leader Rodger Randle.
Nigh defended his decision to increase the corporate income tax late Monday:
"The corporate income tax used to be 6 percent. It was lowered to 4 percent. It'll be on a sliding scale, so it will still average about 6 percent."
Only those firms with taxable incomes above $200,000 will pay the 8 percent tax, according to a sliding-scale chart distributed Monday to state lawmakers.
Nigh said he still "strongly opposed" any increase in the personal income tax or the corporate franchise tax.
"The franchise tax is a tough tax because a business must pay that, whether it makes any money or not. So the corporate income tax, if we were going to have a tax on business, well, this seemed to be the most fair tax of all," Nigh said.
The compromise is a turn-about for Nigh, who insisted last week he would veto any bill that increased the personal income tax or the corporate franchise tax on business.
The plan will come up for a vote Wednesday in the Oklahoma House of Representatives, Barker said.
A 3 1/4-cent state sales tax, a 1 percent increase in the state gasoline tax, and a 3 1/4 percent excise tax on new cars, boats, motors and planes are other key ingredients of the compromise plan.
Current excise tax is 2 percent.
The state's now temporary third penny in sales tax expires Dec. 31 - unless the Legislature extends it this session.
About $280 million in new tax dollars will be raised next year by this compromise plan, if it becomes law, according to Doug Enevoldsen, House fiscal officer.
A total of $441 million in new tax funds would be collected in fiscal 1987 by the plan.
The gasoline tax is expected to raise at least $22 million next year to improve county roads. Another $12 million, or 25 percent of revenues from equalizing car and truck tags, also would go into the county road fund under the compromise plan.
About 70 percent of Oklahoma's firms - those with taxable incomes of $25,000 or less - will continue to pay income tax at the 4 percent rate, Rep. Cal Hobson said, after studying the new sliding-scale chart.
Hobson is the chief author of the omnibus tax bill, House Bill 1219, which will be amended so the compromise plan can be brought up for a floor vote this week.
The other proposed corporate income-tax rates will be applied this way, according to the sliding-scale chart prepared by the Oklahoma Tax Commission:
- A firm with a taxable income from $25,001 to $50,000 will pay $1,000 in tax plus 5 percent of the amount of income over $25,001.
- A company with a taxable income of $50,001 to $100,000 will pay $2,250 plus 6 percent of its adjusted income over $50,001.
- A business with taxable income of $100,001 to $200,000 will pay $5,250 in tax plus 7 percent of its income over $100,001.
- A firm with $200,001 or more in taxable income will pay $12,250 plus 8 percent of the amount of its income above $200,001.
The compromise ended almost three weeks of stalemates on the tax-increase talks held by the three state leaders. …