Desperate for Income, GOP-Controlled Legislature Trains its Sights on the Poor and Small Companies, But GPT on Oil/Gas is Where the Real Money Is

By State Rep. Ben Loring

MIAMI, OK (5 May 2017) – A headline recently in the Journal Record, a nonpartisan newspaper that closely follows all activity in the Capitol and other business and legal news around the state, read, “Late revenue bills target poor, small businesses.” Duh! Like this is a surprise to anyone?

Of course there are those who want to raise taxes on the poor and small businesses. Unlike, say the oil industry, the poor can’t afford to hire an army of lobbyists, not even one single lobbyist. They can’t afford to make large contributions to the campaign slush funds we call Political Action Committees. So, of course, with the state so desperately trying to find income, the Legislature will pick on those who can’t defend themselves: the poor, the little guy.

Let me give you just one small example. Earlier in the session the House passed House Bill 2350, a good bill that would eliminate the sales tax exemption on tickets to professional sporting events. In other words, now when you buy a courtside Thunder ticket, you don’t pay any sales tax on your $1,500 purchase. But under HB2350 you would pay a 4.5% state sales tax, or $67.50, as well as additional sales tax of about the same amount that goes to the city and county. But if today you buy a $6 ticket to a Drillers baseball game, you pay no state tax but you would pay the same 4.5% tax, or $.27, under HB2350.

This bill passed the House of Representatives but was killed in the Senate. So leadership came back with HB2361, under which you would make a “payment in lieu of sales tax”: $1 for any ticket $50 and under, $2 for any ticket over $50. Under HB2350, then, the payment would be equivalent to a 16% tax on that $6 ticket but only 0.13% on that courtside seat. That is 250 times as much (percentage) that the poor guy has to pay to eat a hotdog outside the left field fence as opposed to what the rich guy pays to sit behind Westbrook.

It is not a big difference in amount but it is a HUGE difference in principle. Further, since it is a “payment in lieu of taxes,” the city and county get nothing from it, once again demonstrating the disdain of the Legislature for the plight of local governments.

I have been writing about the Restoring Oklahoma Plan, the House Democrats’ proposal to fix our budget crisis, not with gimmicks but rather with sustainable income. Much happened this week, or did not happen, depending on how you look at it. This week the House JCAB (the Joint Committee on Appropriations and Budget), through which all appropriation bills must come, actually passed some parts of our Restoring Oklahoma Plan.

For instance, we passed combined corporate reporting (HB2369), which would close a loophole in our state tax code that allows a multistate corporation to pay income taxes on profits made in Oklahoma to another state in which it does business, where the tax rates might be lower. Under HB2369, the company has to pay the tax to Oklahoma for profits made in Oklahoma. Giving credit where credit is due, leadership also allowed us to reinstate one-half of the Earned Income Tax Credit (HB2368), which was eliminated last year. This was not actually a part of our plan but is something we of the minority party completely support. It simply helps poor people. At the national level, the EITC’s biggest proponent was President Ronald Reagan.

But the big issue of the week was the cigarette tax. I voted for it in committee as HB1841, and will vote for it again on the floor of the House, if given the proper opportunity. It is part of our plan. The healthcare industry seems to believe this tax is their salvation, and no doubt it would help. But alone, it doesn’t do enough. Further, there are those who want to tie managed care into the deal, which would destroy healthcare in Oklahoma.

But what we need more than anything else is to restore the gross production tax on oil to 5%, or better yet 7%. Remember that army of lobbyists I mentioned? Leadership hasn’t gotten their permission to raise the GPT, even though many small oil companies and executives are lobbying to restore the rate and the public very much wants it.

So, rather than pursuing the GPT, leadership repackaged the cigarette tax, bundled it with a fuel tax increase on the middle class, and elimination of relatively meaningless oil and gas credits in a constitutionally questionable bill, HB2365. That’s how they are trying to twist our arms: make us vote for something we don’t want in order to get something we do want. But neither cigarette bill (HB1841 or HB2365) came up for a floor vote this week, obviously because there are not enough votes on the majority side to pass either one. That’s the way politics is played here at the Capitol. The good news: negotiations continue.

(Representative Loring is a Democrat from Miami, OK.)

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MIKE W. RAY
Media Director, Democratic Caucus
Oklahoma House of Representatives
(405) 962-7819 office
(405) 245-4411 mobile