OKLAHOMA CITY - The average Oklahoma family would save hundreds to thousands of dollars each year if voters opt to replace the state tax system with the Texas tax code, according to an analysis by the State Senate staff.
Senate President Pro Tempore Stratton Taylor said the findings should bolster support for the Texas Plan - his proposal to adopt the Texas tax code in Oklahoma. Texas doesn't have an income tax or a sales tax on groceries.
"When you look at taxes across the board, citizens fare better under the Texas system than they do under the Oklahoma tax code. The evidence indicates that if we adopt the Texas Plan, Oklahoma families will pay lower taxes and as a result, will have more money to spend on themselves. That's not just good for them, it's good for the state economy as well," said Senator Taylor.
The Senate study compared overall state tax burdens of similar families residing in the capital cities of Oklahoma and Texas - Oklahoma City and Austin. The analysis examined the most common state and local taxes paid by individuals, including the property tax, the income tax, the gas tax and the sales tax.
The study indicated that the Texas system levies a lighter overall state and local tax burden on individuals and their families than the Oklahoma tax code. For example, The findings include:Scenario (Income, etc.) Okla. Taxes Texas Taxes Texas Plan Savings Single, $35,000 (renter) $1,987 $ 549 $1,438 Single,$50,000 (home owner) $3,790 $2,975 $ 815 Married, $20,000 (renter) $1,011 $ 395 $ 616 Married, $35,000 (home owner) $2,809 $2,228 $ 581 Married, $50,000 (home owner) $4,018 $3,435 $ 583 Married, $100,000 (home owner) $7,100 $5,763 $1,337 (Taxes include property, sales, gasoline and income taxes)
The study shows that although tax rates in some categories are higher in Texas, the lack of an income tax or sales tax on groceries more than offsets the higher rates.
"We've heard a lot of speculation that Oklahomans might actually pay more under the Texas system, but the facts don't seem to support that theory. Whether you're single or married, whether you rent or own a home, the Texas Plan is a better deal. That's something Oklahomans and their elected leaders need to consider," said Sen. Taylor.
The Senate leader also pointed out that Texas and other states that do not levy an income tax have enjoyed strong economic and population growth in recent years. In fact, those states added congressional representation in the last census while Oklahoma lost one of its seats.
He also noted that Texas spends more money on public education on a per pupil basis than Oklahoma, and has a better track record of attracting Fortune 500 companies.
"The evidence that I've seen tells a very positive story about the Texas tax code. The tax structure, particularly the lack of an income tax, attracts growth and business expansion, education is well funded and families still pay a lower annual tax bill than they do in Oklahoma. It's hard to argue with that," said Sen. Taylor.
Taylor, House Speaker Larry Adair and Governor Frank Keating have asked officials at the University of Oklahoma and Oklahoma State University to help draft language that would allow the Legislature to put the Texas Plan to a vote of the people. They have also asked them to explore the tax systems of other states that do not have an income tax and do not tax grocery purchases.
The Senate leader remains hopeful that the work can be completed in time to be considered during the regular legislative session. If not, Taylor has advocated a one-day special session later this year with a statewide vote coming as early as this fall.
"I'm still optimistic that we can complete our work and put this to a vote of the people sometime this year. The quicker that we can get action, the better," said Sen. Taylor.