OKLAHOMA CITY – Oklahomans will celebrate “Tax Freedom Day” on April 11, a dozen days earlier than the nation at large (April 23), according to an annual report from the Tax Foundation.
That’s good news to state Rep. Randy Terrill, R-Moore, chair of the House Revenue and Taxation Subcommittee.
“That’s certainly consistent with the gains that we’ve made in the taxation area in the last three years,” said Terrill. “We’ve made significant progress in cutting individual income tax rates.”
Terrill said rates have been reduced about 20 percent during that time period.
Republican leaders’ goal is to get the top marginal rate under 5 percent, he said.
“We certainly have been heading the right direction in terms of providing tax relief for working Oklahomans,” Terrill said.
He said lawmakers are currently considering expansion of the back-to-school sales tax holiday and the franchise tax exemption for small businesses.
Acknowledging the general slowdown in the economy, Terrill said Oklahoma’s economic picture is rosier than some states due to tax relief at the state level, conservative fiscal policy, the fact that the credit crunch and housing market crisis have not hit Oklahoma as hard as some states and the robust health of its energy sector, among other factors.
Oklahoma ranks 43rd among the states, outscoring Texas, whose residents will stop working for the tax man on April 12. Texas ranks 40th on the foundation’s list.
“Over the past three years, we have been increasing our competitiveness position relative to surrounding states,” Terrill said. “That indicates that our government is less of a burden on our citizens than is the government of the state of Texas on their citizens.”
Tops, at 50, is Alaska, whose Tax Freedom Day will occur March 29. Last is Connecticut, at May 8. New Jersey residents must work until May 7 to satisfy their total tax bills, New York residents until May 5. They rank second and third in the foundation’s study.
Other states close to Oklahoma in ranking are Tennessee, April 11; Kentucky, April 10; and New Mexico and South Dakota, both April 12.
Oklahoma ranked 38th last year (April 17), 42nd the year before (April 15). Oklahomans have experienced reductions in state income tax rates in recent years.
The state ranked 50th from 1970-1972.
The highest Oklahoma has ranked was 18th in 1982.
National Tax Freedom Day is three days earlier this year, which foundation officials attribute to the pending economic stimulus rebates and a projecting of slow growth.
“Government continues to dominate the American taxpayer’s budget,” said foundation President Scott Hodge. “Americans will still spend more on taxes in 2008 than they will spend on food, clothing and housing combined.”
This year, Americans as a whole will work 74 days to afford their federal taxes, 39 more to pay state and local taxes.
Purchasing food requires 35 workdays, clothing 13 days, housing 60 days, health and medical care 50 days, transportation 29 days and recreation 21 days.
Foundation senior economist Gerald Prante said that tax freedom has been a seesaw affair in recent years, occurring on May 3, the latest date ever, in 2000.
“Then a string of tax cuts between 2001 and 2003 pushed Tax Freedom Day up by more than two weeks, so that it fell on April 16 in 2003 and April 17 in 2004,” Prante said.
Incomes and tax collections soared over the next three years, pushing the day back to April 26 in 2007.
Foundation researchers determined that five major categories dominate the tax burden.
Federal and state income taxes require 42 days of work, followed by payroll taxes at 28 days, sales and excise taxes at 16 days, corporate income taxes at 13 days and property taxes at 12 days.
To reach its tax-freedom conclusions, the foundation divided total tax collections by the nation’s total income. This year, taxes amount to 30.8 percent of income, and the number of days from Jan. 1 to April 23 is 30.8 percent of the year. Income and tax data are divvied up among the states to calculate state-specific Tax Freedom Days.
Here’s something to ponder: In 1900, taxes amounted to 5.9 percent of income, which would have set Tax Freedom Day at Jan. 22.
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