Legislators Want Interim Look at Tax Cuts

Article excerpt

Corporate franchise tax laws and rules, exempting stock sales from taxation as income and removing the state sales tax on groceries are among the issues lawmakers want to study before the Legislature reconvenes next February.

Rep. Danny Hilliard, D-Sulphur, has asked House Speaker Loyd Benson, D-Frederick, to approve an interim study of existing franchise tax laws and regulations.

Hilliard said the purpose of the study is to determine the number of entities affected, the total revenue generated and the cost to administer franchise tax laws, regulations and collections. In addition, the study would include the estimated cost of compliance to affected entities and explore options to create equality among other entities in the state. Oklahoma Tax Commission officials estimate the state derives about $38 million each year from this levy, which amounts to $1.25 on each $1,000 of capital invested or otherwise utilized for business purposes in Oklahoma. The law applies to corporations, associations, joint-stock company and business trusts organized under Oklahoma law. Rep. Hopper Smith, R-Tulsa, and Sen. Lewis Long, D-Glenpool, have asked for a joint study of the possibility exempting from taxation any income derived from the sale of corporate stock. The concept is similar to House Bill 1940, authored by Smith, which did not come out of committee in the House this year. The bill would exempt stock-sale income in excess of the amount paid by an individual for the same number of shares of stock, or the capital gain made on the stock. Currently, Oklahoma corporations pay a 6- percent income tax. Smith said Thursday that he does not yet have an estimate of the concept's possible fiscal impact on state tax collections. "If it increases a stock's liquidity and value," said Smith, "it could be that the cost to the state could be more than made up in increased revenue from increased business activity. There could be an increase in state revenues." In addition to any impact on state coffers, Smith's study will consider: * Any benefit to publicly-owned Oklahoma corporations. * Whether such an exemption could help prompt more corporations to relocate to Oklahoma. * Its long-term economic impact to the state. Smith wants to include the participation of as many publicly owned Oklahoma companies as possible in the study. He said the review should also consider the input of the investment banking industry. Rep. John Sullivan, R-Tulsa, has asked Benson to approve a joint study of eliminating the state sales tax on groceries. According to tax commission data, taxing the sale of food brings in about $170 million annually in state revenues. …