Newspaper article THE JOURNAL RECORD

State Lawmakers Reach Tax Compromise

Newspaper article THE JOURNAL RECORD

State Lawmakers Reach Tax Compromise

Article excerpt

State lawmakers passed a compromise tax cut/earned income credit bill Wednesday that could save taxpayers a total of $46.3 million.

House Bill 1933, by Rep. Opio Toure and Sen. Bernest Cain, both D- Oklahoma City, reduces the top marginal income tax rate for Method I from 6.75 percent to 6.65 percent. About 80 percent of Oklahomans use Method I to calculate their state income taxes.

This part of the bill will mean a revenue loss to the state in fiscal 2002 of $9.67 million, or $23.8 million for a full year.

Other language in the bill establishes an earned income credit equal to 5 percent of the federal credit for low-income wage earners. For the upcoming fiscal year, its impact is zero or minimal, but taxpayers will gain $22.5 million for fiscal 2003.

This provision could impact 300,000 lower-income state taxpayers.

The bill passed the House 95-5 and the Senate 44-0. It now goes to Gov. Frank Keating.

In House debate, Toure pointed out the maximum federal earned income credit is $3,888 for a family with two or more children. At this level, a 5 percent state credit would amount to $194.

Oklahoma will join 15 other states that offer a state earned income credit.

As the measure is written, the state credit is refundable only if it exceeds a taxpayer's Oklahoma income tax liability.

Toure said the revenue loss from the income tax cut would be offset by other language accelerating payment of sales taxes by larger state businesses. Firms that owe an average of $100,000 or more in sales taxes each month would come under this provision. In March 2002, the accelerated remittance schedule will apply to businesses whose sales tax bill totals $25,000 or more per month.

Payment would be required by electronic funds transfer.

Rep. John Wright, R-Broken Arrow, spoke against the bill. He said that the earned income credit amounted to a governmental wealth- distribution mechanism. …

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