What if there was a tax break costing the state over $100 million every year and benefiting just 1 percent of households? What if nearly two-thirds of that benefit went to fewer than 1,000 households making over $1 million a year, while the vast majority of Oklahomans, those making under $100,000 a year, shared less than 10 percent? Finally, what if repealing this tax break would boost state revenues by an estimated $120 million, enough to partly fund a teacher pay raise? Turns out there is such a tax break and this session we have a chance to repeal it.
SB 1086, a bill that would repeal the capital gains tax break, is up for a vote this week. Oklahoma’s capital gain deduction allows income from the sale of Oklahoma real estate or stock in an Oklahoma-based firm to go fully untaxed. The capital gains tax break is poorly targeted and poorly monitored. Economic development experts working with Oklahoma’s Incentive Evaluation Commission concluded that this tax break reduced state revenues by $474 million from 2010 to 2014 while creating only $9 million in revenue growth, for a net cost of $465 million. They concluded that this tax break “cannot be credibly shown to have significant economic impact or a positive return on investment” for Oklahoma, and recommended its repeal.
Oklahomans agree. Fifty-five percent of Oklahoma registered voters favor ending the capital gains tax break, compared to just 35 who would oppose ending it.
Capital gains should be taxed at the same rate as income earned by working Oklahomans. It’s time for this inefficient and unfair use of tax dollars to go. You can find your legislators information here. Please call your state senator today and ask them to vote YES to SB 1086. This bill will be heard this week. (For tips on how to boost your influence when advocating with your lawmaker, see our advocacy tipsheets.)
Other pieces of legislation we’re following:
- HB 1270 would require the state to completely rebuild its online SoonerCare enrollment system, at a total one-time cost of $1.2 million and a yearly cost of up to $450,000. This would make it harder for families who need SoonerCare to get and keep their coverage. HB 1270 passed both the House and the Senate last spring and could be heard in the House to approve Senate amendments this week.
- HB 2932, HB 3556, and SB 1179 would terminate SoonerCare coverage for Oklahoma parents who fail to work a certain number of hours per month Governor Fallin signed an executive order last week ordering the state Medicaid agency to seek a federal waiver to add a work requirement, but legislators are still moving ahead with bills that have the same purpose. HB 2932 passed the House last week and SB 1179 passed the Senate today.
- SB 1030 would slash the income eligibility for SoonerCare to just 20% of the Federal Poverty Line. This would cause 43,000 parents to lose their health care coverage. SB 1030 passed the Senate 25-17 with the title stricken and now goes to the House.
- HJR 1050 would ask the voters to amend the requirement in the state Constitution that requires a revenue bill to be approved by 3/4 of the members of both chambers. In its current form, HJR 1050 would lower the supermajority requirement to 2/3rds, but an amendment filed by House Speaker Pro Tem Harold Wright would set the threshold at 3/5ths. HJR 1050 is set for a vote by the full House this week.
