Oklahoma's wealthiest citizens, particularly its millionaires, would be the biggest beneficiaries of Governor Keating's proposed state income tax cut, according to a new analysis by the Senate staff.
The study shows that more than 81 percent of the $1 billion tax reduction proposed by Governor Keating would go to a little over one-third of Oklahoma taxpayers - those who make more than $50,000 a year.
Millionaires would get the best treatment under the Keating program, receiving almost 10 percent of the tax cut revenue even though they comprise less than one-half of one percent of state taxpayers.
For example, when the initiative is fully implemented, the average tax cut for an Oklahoman earning more than $1 million would be $19,985. The average tax cut for an Oklahoman earning $25,000 or less would be $82.
"For the millionaires, it's a great deal, but for a working family, it's doesn't add up to much. The millionaires get enough to buy a new car each year; the working man gets enough to take his family out to McDonalds once a month. That's not fair. If we're going to cut taxes, let's do something that does more to help hardworking Oklahoma families, instead of giving the bulk of the tax cut to the rich," said Senator Jeff Rabon, who has authored a proposal that would create a sales tax holiday in Oklahoma.
Governor Keating, a reported millionaire, has proposed that the state income tax be cut from 6.75% to 3.75% over the next six years. When fully implemented, the tax reduction will amount to $1 billion per year - most of which will be raked in by Oklahoma's richest citizens.
Some of the findings of the Senate analysis include:
"When you break down the Governor's tax cut by income bracket, the amount that goes to wealthier Oklahomans is just staggering. Even though they represent a minority of Oklahomans, they get the vast majority of the Keating tax cut. The little guy gets almost nothing and I don't think that's fair," said Senator Rabon.
The Hugo legislator is advocating a more equitable approach to tax relief, such as a sales tax holiday on back to school purchases. Senator Rabon is the author of SB 488, a measure that would create a three-day tax holiday in Oklahoma.
"I think that makes a lot more sense because it would distribute the tax savings much more equally among Oklahomans. Everyone, rich or poor, would get the same tax break on back-to-school purchases. Savings may vary a little bit from family to family and person to person, but they certainly wouldn't be heavily weighted to favor wealthy Oklahomans as they are in Governor Keating's income tax program," said Senator Rabon.