BY KENNETH WELLS
The Center on Budget and Policy Priorities [a non-partisan advisory group to federal, state and city governments] has produced a study on the effects of cutting state income taxes. Four of the five biggest tax-cutting states have seen a slower private-sector job growth than has the rest of the nation.
These states also project slower than average U.S. job growth over the next three years. This follows a trend that has appeared in the majority of recent studies by economists.
Lost state revenues, caused by income tax cuts, is harming Oklahoma’s economy today. One of the hardest hit state programs is education.
Oklahoma is fast joining a group of states that have steadfastly refused to raise enough state revenues to adequately fund education, safety [including state justice systems] and other needed social programs.
Because states with drastic income tax cuts still have to balance their budgets, they are doing so by creating other taxes or higher fees to provide insufficient funds for the aforementioned programs. This causes their economies to slow down.
Well-managed and growing firms consider “worker quality” more important than taxes. When cutting taxes hurts the quality of schools and colleges, a state will soon be considered “below par.”
One of the biggest fallacies used by Republicans is their “lower taxes create more jobs” mantra. Research indicates that the majority of people who receive tax cuts do not create additional jobs.
Additionally, this same study has shown that, nationally, fewer than 3% of income taxpayers own a business which hires additional people.
The temporary work slowdown in the oil industry is not the only reason Oklahoma is already facing a budget shortfall of over $611 million for the 2015-16 state budget. The shortage of revenues has come about from a desire of the current party in power to slash taxes on those who can afford to pay them while levying higher fees and sales taxes which lower income individuals cannot afford and still adequately provide housing, utilities, food and clothing for their families.
At the same time, Oklahoma provides tax breaks for “phantom future jobs” to companies who can afford lobbyists to promote their agendas. In fact, HB 1747 [Rural Opportunity Zone] is a prime example of the ability of money to corrupt our legislative system. This bill, surprisingly, is similar to a three-year-old piece of Kansas legislation and closely tied to previous “job opportunity” tax breaks.
HB1747 recently passed out of the House to the Senate. However, it was only heard by a committee on Rural Development, not by the House Revenue and Taxation Committee. Now, it is the Senate Finance Committee’s turn to consider HB 1747.
To clarify my point, the “job opportunity” program was developed to encourage companies to locate in rural counties which are suffering population loss due to lack of available jobs. Though perhaps well-meaning, there are three major problems with HB 1747:
First, the bill does not have even an estimate on the cost of its program.
Second, like current “jobs bills,” HB 1747 does not include oversight required to insure that Oklahoma will receive any job growth benefits from the tax give-away.
Third, after three years implementing a similar plan, Kansas is still losing population in rural counties at a rate greater than before the legislation became effective.
HB 1747 will also further decimate the budgets of education, public safety, environmental controls, health, transportation, infrastructure and all of the other state-managed social welfare programs!
A well-educated, healthy workforce with a sound transportation system and family-friendly infrastructure will do more to create job opportunities than more un-audited tax breaks for big business.
– Kenneth Wells lives in Ratliff City, OK, and is an occasional contributor to The Oklahoma Observer. His essays appear in newspapers across southwestern Oklahoma.