Tax Reform: New and Hidden Taxes

By Pitts, William O. | THE JOURNAL RECORD, July 2, 2001 | Go to article overview

Tax Reform: New and Hidden Taxes


Pitts, William O., THE JOURNAL RECORD


From a political standpoint a gross receipts tax to replace the state income tax has several advantages. It is little wonder legislative leaders are looking favorably in its direction in the currently pending tax reform discussion.

A single, broad-based gross receipts tax could replace a significant amount of the revenue lost by eliminating the state income tax, exempting groceries from the sales tax, and changing the estate tax to make Oklahoma a so-called "pick up" state.

The Revenue Neutral Tax Reform For Oklahoma (RNTR) final report was prepared by two OU and three OSU economics professors at the direction of Senate President Pro Tempore Stratton Taylor. It points out a 1 percent gross receipts tax would produce $2.04 billion in state revenues. That comes close to covering doing away with the income tax and exempting groceries from the sales tax.

Since there are no constitutional amendments needed to enact the gross receipts tax while getting rid of the income tax and making the proposed changes in the sales and estate tax, technically the whole package could be enacted by the Legislature. It's possible but not likely.

When it comes down to an issue of this importance there is little doubt the Legislature will want voters to decide. Why not? Given an opportunity to choose a tax ostensibly falling in the business sector, while eliminating the income tax and sales tax on groceries, it takes no political genius to figure out how they will vote.

Another political advantage is the gross receipts tax is a hidden levy. It becomes part of the price of a service or commodity. Consumers are unaware of its existence. They only see what they pay as the price of the product.

The tax is like a salesman's expense report. There are items in it that aren't on it.

It is easier to manipulate or raise hidden taxes because consumers don't knowingly feel the brunt. Income taxes, and property taxes are all identifiable to the taxpayers because they have to make a direct effort to pay them.

Even with the sales tax, where the tax is clearly listed separately from the price of the item, consumers rarely notice. About the only time they pay attention to it is if they buy large- ticket items like furniture or major appliances where the tax is a significant amount.

In Oklahoma the only real levy that passes for a gross receipts tax is the 7 percent severance tax on minerals, the bulk of which is oil and gas production.

There is a difference in this particular case.

Oil and gas purchasers, not producers generally determine the price. The result is the tax is not passed on to the consumer. If a producer sells his oil for $10 a barrel the 70 cents gross production tax is not added to that price, but is subtracted from the proceeds to the producer and paid to the state. There is little or no opportunity for the producer to charge a higher price for his oil and gas to cover the tax.

Because of this existing 7 percent tax the report suggests producers be exempt from the gross receipts tax. It also suggests Oklahoma's price-based sliding tax scale on oil priced at $17 or less per barrel be extended. …

The rest of this article is only available to active members of Questia

Sign up now for a free, 1-day trial and receive full access to:

  • Questia's entire collection
  • Automatic bibliography creation
  • More helpful research tools like notes, citations, and highlights
  • Ad-free environment

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Default project is now your active project.
Project items

Items saved from this article

This article has been saved
Highlights (0)
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

Citations (0)
Some of your citations are legacy items.

Any citation created before July 30, 2012 will labeled as a “Cited page.” New citations will be saved as cited passages, pages or articles.

We also added the ability to view new citations from your projects or the book or article where you created them.

Notes (0)
Bookmarks (0)

You have no saved items from this article

Project items include:
  • Saved book/article
  • Highlights
  • Quotes/citations
  • Notes
  • Bookmarks
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited article

Tax Reform: New and Hidden Taxes
Settings

Settings

Typeface
Text size Smaller Larger Reset View mode
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Full screen

matching results for page

Cited passage

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited passage

Welcome to the new Questia Reader

The Questia Reader has been updated to provide you with an even better online reading experience.  It is now 100% Responsive, which means you can read our books and articles on any sized device you wish.  All of your favorite tools like notes, highlights, and citations are still here, but the way you select text has been updated to be easier to use, especially on touchscreen devices.  Here's how:

1. Click or tap the first word you want to select.
2. Click or tap the last word you want to select.

OK, got it!

Thanks for trying Questia!

Please continue trying out our research tools, but please note, full functionality is available only to our active members.

Your work will be lost once you leave this Web page.

For full access in an ad-free environment, sign up now for a FREE, 1-day trial.

Already a member? Log in now.