Tax Cuts
11:30 am
Mon February 17, 2014

OSU Economist, OU President Question Governor's Tax Cut

Oklahoma Gov. Mary Fallin speaks to members of the Greater Oklahoma City Chamber of Commerce Feb. 13.

Gov. Mary Fallin took her policy priorities to the overall friendly audience of the Greater Oklahoma City Chamber last week. Speaking to the pro-business group’s members, Fallin reiterated her call for a cut to the state income tax rate and the graduation of more “job ready” residents.

Gov. Mary Fallin delivers the 2014 State of the State address as Lt. Gov. Todd Lamb and House Speaker T.W. Shannon (R-Lawton) look on - February 3, 2014.
Credit Joe Wertz / StateImpact Oklahoma

“I still think it's one of the most important things that we can do is have responsible tax cuts when it's appropriate for our state, and to give our Oklahoma families more money to be able to put in their own pocket because they turn around and spend that money,” Fallin said.

The governor also says such cuts attract more jobs and companies to Oklahoma.

But the evidence for such an economic boost is thin, according to a guest blog post for the Oklahoma Policy Institute by Oklahoma State University economist Dan Rickman:

Oklahoma State University economist Dan Rickman
Credit OSU Spears School of Business

“Evidence from my own studies and those of many others suggests that adjustments in state and local taxes and spending can, at most, spark marginal gains in economic performance. Across the United States in recent decades, states and localities have adopted more similar tax and spending policies, leaving less room for improvement.”

Rickman’s research also indicates Fallin’s statements that the evidence shows income tax cuts boost overall revenues to government is without backing.

“Crucially, there is no evidence that tax cuts pay for themselves by boosting future growth and tax collections. For public officials, there is no escape from carefully considering how various balances of taxes and spending affect both government budgets and surrounding economies.”

The left-leaning Oklahoma Policy Institute reported the tax cut proposed by the governor would mean an extra $29 in savings for the average Oklahoman.

Fallin’s tax cuts and lack of funding for higher education also led University of Oklahoma President David Boren to write that both policies are a mistake.

"Can we afford another tax cut when we can't give another tax cut without cutting vital services?" - University of Oklahoma President David Boren

Boren told the Tulsa World residents need to start asking, "what kind of state do we want to be? Who are we as a people? I don’t think we want ignorance and lack of opportunity to be our legacy.”

Boren points out in the 1970s state funding made up about half of OU's budget. It is now down to 17 percent, resulting in what he calls a privatization of public higher education.

He is says he is also concerned colleges and universities have to make tough decisions about whether to keep quality programs or start offering narrow opportunities for students.

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