Oklahoma needs tax code overhaul
At more than 80,000 words, Oklahoma’s constitution is the thirdlongest state constitution in the United States, behind only Texas and Alabama. But our state’s constitution is a model of brevity compared with the U.S. tax code. It contains more than 2.4 million words.
Over the years, the U.S. tax code has become bloated with pages of patches and revisions that make our taxes more complicated each year. Congress should keep this is mind as it moves toward the first major tax reform since 1986.
A shorter and fairer tax system cannot come soon enough. The current system is riddled with special-interest loopholes, complexities and unfair policies that make it difficult to understand without paying for tax help. The current system is outdated and expensive. For rural and small-town communities especially, this is like tying a weight to a runner competing in a race.
Given the nature of Oklahoma’s economy, the stakes are high. We have nearly 700,000 small businesses and the majority of our workforce is employed by a small business. These businesses are concentrated in small towns and farming areas.
More than 78,000 farms cover nearly 35 million acres in Oklahoma. Many men and women working these farms are secondand third-generation. Their efforts produce more than $7 billion in sales each year and are crucial to sustaining communities across this state. The problems that the current tax system inflicts on them is a special concern to the National Grange.
As Congress prepares to update the tax code, it should focus on some core issues. First, the tax code must be made simpler.
Second, Congress should recognize that a tax code that better reflects today’s small-town economics will benefit communities across the state. This means preserving cash accounting so that farmers will be taxed on production and sales, not investment.
Farming and ranching are vital to Oklahoma’s economy. A tax code overhaul must enhance, not harm, our rural economic infrastructure. This means preserving cash accounting to level out the effects of weather extremes and the shifts of commodity prices and input costs. It also means reducing capital gains taxes, particularly on asset changes to family members who are part of the farm business. For farms and ranches, this tax can be a major stress.
Congress must phase out the estate tax, which is a terribly unfair burden on family farms and many other small businesses. There is no reason for a federal death tax to stand in the way of the next generation inheriting the family business.
Finally, it's vital that taxes on corporations, including farm and ranch operations, no longer undercut common-sense economic goals. Today’s high corporate rates have resulted in less investment, fewer jobs and companies keeping profits overseas. Meanwhile foreign competitors pay lower taxes, which gives them an advantage over companies and farm operators here in the United States.
For Oklahoma and the country, the impact of this fall’s tax reform efforts will last for years and perhaps decades. Congress must get this right. A fairer system that encourages jobs and investment, particularly across Oklahoma’s small-town communities, is an excellent place to start.
The current tax system is riddled with specialinterest loopholes, complexities and unfair policies that make it difficult to understand without paying for tax help. For rural and smalltown communities especially, this is like tying a weight to a runner competing in a race.