Statewide vote sought on tax penalty

OKLAHOMA CITY (AP) _ A Tulsa man who once drew the ire of the Internal Revenue Service has filed an initiative petition seeking to end built-in state income tax increases tied to Oklahoma's failure

Thursday, March 28th 2002, 12:00 am

By: News On 6

OKLAHOMA CITY (AP) _ A Tulsa man who once drew the ire of the Internal Revenue Service has filed an initiative petition seeking to end built-in state income tax increases tied to Oklahoma's failure to raise deductions since 1982, records showed Wednesday.

The petition was filed without fanfare on Jan. 22 by Richard Gardner, owner-operator of Gardner's Tax Service in Tulsa.

Gardner said he did not act on the part of any organized group.

``I just wanted to do something for people who are getting a tax increase every year because the state has not adjusted deductions for inflation,'' he said.

``Basically, Oklahoma is raising taxes every year on hundreds of thousands of lower- and middle-income people, including many who live under the poverty line.''

Gardner said he has been in the tax service business since 1973 and his ``niche of fame'' came when his business was raided by IRS agents in 1995.

He said federal charges of preparing false tax returns were dropped in 1998 after he testified before the U.S. Senate Finance Committee, which was investigating allegations of IRS abuse.

``The IRS paid me $75,000 for raiding my office and seizing tax returns and computers in March 1995,'' he said. He said the IRS allegations were ``a bunch of baloney'' and were caused ``when I made an IRS collection agent mad.''

Through a network of accountants, Gardner said he has collected 10,000 to 12,000 signatures on petitions. But he said legislative talk of possibly raising deductions has hurt his effort, causing many accountants to return the petitions.

Raising state deductions is part of ongoing discussions by members of a state task force charged with coming up with a tax reform plan for consideration by the Legislature this session.

Gardner's petition proposes, in the second year after voter approval, to tie state income deductions to the amounts allowed on federal income tax returns.

That would mean a tax cut each year of hundreds of dollars for the 61 percent of Oklahoma taxpayers who do not now itemize deductions on their federal returns, Gardner said.

It also would mean a drop in state revenue of more than $400 million, according to the Oklahoma Tax Commission.

Oklahoma's income tax system has drawn criticism because its maximum rate of 7 percent kicks in at $10,000. Experts say the state's failure to adjust its deductions has made the system more regressive.

The state deduction for personal exemptions has been at $1,000 per person since the late 1970s. Federal personal exemptions, meanwhile, have increased to $2,900.

The standard deduction on federal forms is $4,500 this year for a single taxpayer and $7,200 for a married couple. On Oklahoma forms, it is $1,000 to $2,000 depending on status and income, the same as it has been for more than two decades.