Governor’s tax plan serves to clarify choices

IF nothing else, Gov. Mary Fallin’s tax proposals have had a clarifying effect. It’s one thing to decry government spending cuts in the abstract, and another thing altogether to oppose such cuts when you learn the cost of preserving agency spending will come out of your pocket.

Fallin’s plan calls for applying the state sales tax to 164 currently untaxed services, raising the fuel tax, boosting the tobacco tax, and eliminating the sales tax on groceries and the corporate income tax.

The proposal is based, in part, on a desire to overhaul Oklahoma’s tax code so it reflects the modern economy. Fallin’s budget plan notes that, according to Bureau of Labor statistics, in 1939 service industries employed more people than manufacturing by a ratio of 2-to-1. Today that ratio has grown to around 5-to-1.

This means a sales tax applied primarily to goods reaps far less money than in decades past. Yet the impact of addressing that discrepancy in a single year is jarring to many citizens.

That’s looking only at the broader, long-range picture. In the short term, Fallin’s budget plan addresses this year’s $868 million shortfall without additional budget cuts. Thus, people could wind up paying more for everything from doctor’s visits to insurance to funerals to maintain existing government services. We’ll soon know what Oklahomans think of that.

Lt. Gov. Todd Lamb made his feelings clear by resigning Thursday from Fallin's cabinet, saying the sales tax proposal would hurt small businesses and families. At the other end of the spectrum, some politicians who protested state spending cuts the most are now running away from the cost of the policies they’ve advocated.

Rep. Scott Inman, a Del City Democrat who leads the House Democratic caucus, has previously accused Fallin of insisting “that Oklahoma doesn’t have a revenue problem,” but a spending problem.

Yet now that Fallin has unveiled a plan addressing revenue, Inman's tune has changed. Following Fallin's State of the State speech, Inman complained that Fallin had “offered up more than $1 billion worth of new taxes on the backs of middle-class and working-class Oklahomans. While our caucus wants to find new revenues, we fundamentally disagree with the idea that shifting the tax burden from the wealthiest Oklahomans to the poorest of Oklahomans ... is the way to produce prosperity and growth in Oklahoma.”

The idea that massive increases in government spending can be maintained while taxing only “the rich” is the default position of many liberals, and demonstrably false. There simply aren’t enough millionaires in Oklahoma.

While Democrats often argue income taxes should be raised instead of expanding the sales tax, that would involve imposing a huge tax increase on Oklahomans earning as little as $8,700 per year under Oklahoma’s tax code. (In Oklahoma, politicians have always defined “the rich” to include pretty much everyone.)

Thus, whether officials raise the income tax or expand the sales tax, the vast majority of Oklahomans will pay the price via a heavier tax burden.

As a result, the choice comes down to this: Which do Oklahomans want more — greater state government spending or a higher level of take-home pay? The answer citizens provide lawmakers will determine the course of this year’s budget process.