OKLAHOMA CITY (AP) Gov. Brad Henry's tax relief plan advanced to the House floor Wednesday, when it received bipartisan approval from a legislative committee.
The House Appropriations and Budget Committee voted 17-0 for the $163 million measure that includes $100 million in tax rebates and the creation of a $1 billion research endowment.
If approved by the state House, the bill is expected to go to a House-Senate conference committee where Republicans will attempt to merge it with a competing tax plan proposed by GOP House Speaker Todd Hiett of Kellyville.
Hiett's plan includes the Democratic governor's proposal but would also provide a $100 million cut in the state income tax.
The Democratic governor's plan calls for returning half of the state's excess revenue to Oklahoma taxpayers when the state's Rainy Day reserve fund reaches its constitutional limit.
``This year alone, we could see the return of as much as $100 million to taxpayers who earned that money and can use it for savings, investment of however they see fit,'' Henry said.
The other half of excess dollars will be earmarked for a research endowment that was recommended by the Economic Development Generating Excellence report.
``This research endowment is crucial for Oklahoma's ability to compete in an increasingly high-tech and global economy,'' the governor said.
Henry's tax reform measure includes $63 million in additional tax relief. The plan would expand the income tax exemption for retirees from $7,500 to $10,000, extend the capital gains tax elimination on Oklahoma-based property to corporations and expand estate tax exemptions to include collateral heirs, like brothers and sisters.
Henry has also proposed a statewide sales tax holiday on back-to-school purchases, similar to a successful program in Texas.
Hiett embraced the governor's program when he added it to his own tax relief plan.
The plan, which was passed by the House and amended in the Senate, cuts the state's maximum income tax rate from 6.65 percent to 6.25 percent, beginning in 2006. The measure would reduce revenue by about $100 million a year, according to lawmakers.
If approved by the state Senate and signed by Henry, the income tax cut will be the second reduction in the maximum tax rate in as many years. The current rate was reduced from 7 percent last year by a statewide vote of the people.
Hiett has said Oklahoma's income tax is a deterrent to economic growth and places the state at a disadvantage with adjacent states, including Missouri and Colorado, where tax rates are lower. Texas does not have a state income tax.
Only Arkansas has a higher tax rate in the region.