Governor Brad Henry proposes 'tax cuts'
Thursday, January 22nd 2004, 12:00 am
News On 6
OKLAHOMA CITY (AP) _ A series of tax cuts were proposed Thursday by Gov. Brad Henry in what the governor's office characterized as an unprecedented effort to grow Oklahoma's economy.
Henry, who is in the middle of building his budget for the upcoming legislative session, proposed the elimination of all capital gains taxes on Oklahoma-based property, permanent reduction of the state's top income tax rate to 6.65 percent and the expansion of income tax relief for retirees.
``This targeted tax relief is designed to incentivize investment in and growth of Oklahoma companies and encourage the relocation of out-of-state corporate headquarters to Oklahoma,'' he said.
``By eliminating the tax on capital gains on Oklahoma-based property and permanently lowering income tax rates, we can encourage new investment in our state and the creation of jobs,'' the Democratic governor said.
``Additionally, providing income tax relief to retirees helps attract wealth to Oklahoma because it makes our state a more attractive place to retire.''
No figures were immediately available from the governor's office on the cost of the tax relief package.
Henry said Oklahoma needs to reduce its capital gains tax for Oklahoma to be considered a ``destination state'' for corporate headquarters.
``By targeting the capital gains exemption to only Oklahoma-based operations, we can encourage people and companies to invest here instead of taking their money and jobs elsewhere.''
He said Oklahoma already has some of the lowest business costs in the country and the capital gains change will ``make us even more competitive'' and ``pay for itself in the creation of new jobs and additional investment in our economy.''
To provide larger tax breaks for retirees, Henry proposed to raise the current state income tax exemption on retirement income from $5,500 to $7,400 and to increase eligibility thresholds from $25,000 to $37,500 for single retirees and from $50,000 to $75,000 for married couples. He also wants to eliminate the requirement that private sector retirees meet certain age requirements to qualify for the exemption.
Henry said his plan ``will provide a much needed boost to Oklahoma seniors in addition to improving our state's reputation as a retiree-friendly state.''
He said he would continue to explore additional tax cuts for retirees in future years.
The state income tax rate already was scheduled to revert to 6.65 percent, from the 7 percent it has been for several months, because state revenues this year will exceed those of the previous year.
Under a law passed during the administration of Republican Gov. Frank Keating, the top tax rate was reduced to 6.65 percent. But a provision was placed in the law automatically raising the rate back to 7 percent when a revenue shortfall occurs.
Officials said reverting to the 6.65 percent rate would cost the state treasury $16 million.
``We need to assure Oklahomans and those companies that may wish to locate here that the state will not automatically increase income taxes when Oklahoma experiences a dip in revenues,'' Henry said. ``A fluctuating income tax rate doesn't help taxpayers or economic development.''