BY ARNOLD HAMILTON
One of the citizen-lobbyists sent me this e-mail:
Yesterday at the rally for public education my legislator told us that it was a fact that every time income tax rates went down the state economy improved; therefore it would be best if we continued reducing state income tax.
My question is: Weren’t state tax rates reduced during Frank Keating’s term as governor? If so, did this result in a better economy? What is the truth in all this? I seem to recall cutting the taxes had the opposite effect.
Congratulations! You have a better grasp of the facts than your legislator who’s spreading the Republican canard that cutting taxes – voila! – generates more revenue [ostensibly because people have more money to spend].
Former President George H.W. Bush accurately referred to such poppycock as “voodoo economics.” Ronald Reagan’s budget director David Stockman also put the lie to so-called trickle-down economics, resulting in his infamous trip to the Reagan “woodshed.”
The rally-goer is correct that taxes were cut under Republican Keating … and again under Democrat Brad Henry … but today’s GOP lawmakers conveniently forget that both governors ended up draining the state’s Rainy Day Fund in order to protect vital state programs.
It is true that Oklahoma’s revenue has increased since tax cuts were enacted, but not because they are the economy’s great stimuli – it’s because we’re in the midst of an oil/gas boom.
In fact, the state’s soaring energy sector is masking the worst of the damage that’s being done to our state government’s funding base.
When the bust occurs – as it inevitably will – we’re going to be in a helluva mess.
Just ask former Gov. George Nigh or former Senate President Pro Tem Cal Hobson. They saw what 23 tax cuts between 1979-83 did to Oklahoma’s economy when the Penn Square Bank-era economy cratered almost overnight.
Had they not raised taxes significantly, the lights would have been turned out in Oklahoma.
When oil/gas – famous for its boom-bust cycles – takes its next dip, Oklahoma will have no way to make up the revenue necessary to fund vital state services such as public education, corrections, highways, etc. Thanks to SQ 640, it’s nearly impossible to raise taxes, no matter how dire the circumstances. It would take approval of a legislative super-majority or the voters in a statewide referendum – neither likely in our something-for-nothing political culture.
The Legislature is hell-bent on cutting income taxes another $120 million or so this session – even though we face a $188 million budget hole [in the midst of an oil/gas boom!]
Who do the tax cuts benefit? Mostly the state’s wealthiest 1%. The average Oklahoma family will save $29 in taxes – not even enough for dinner at McDonald’s and a movie.
Sadly, few of these elected yahoos will even be around – thanks to term limits – to deal with the damage they’ve done.
– Arnold Hamilton is editor of The Oklahoma Observer
Photo: Doug Folks/OEA