Yes, taxes matter
We’ve noted that Oklahoma’s liquor laws are overly complex and impede the free market. Defenders of the current system may take heart in the results of Washington state’s privatization of the liquor market. That would be a mistake.
Previously, the state of Washington owned liquor stores; nongovernmental sellers could only provide wine or beer. State voters recently approved a measure to privatize the industry. The number of retail outlets surged from 328 to more than 1,500.
You would expect that to lower costs to consumers, but liquor prices rose 17 percent. The reason for the increase wasn’t a bizarre side effect of greater competition, but significant taxes of 10 percent and 17 percent imposed on distributors and retailers, respectively.
Just as excessive regulation can reduce competition and drive up prices, excessive taxes can undermine the benefits of competition and punish consumers.
Where are those audits?
Nearly 80 Oklahoma towns have failed to file annual financial audits and are forfeiting more than $90,000 in gasoline excise taxes under state law. That’s unfortunate for several reasons.
Public confidence in government relies on transparency. When local governments repeatedly refuse to have their books audited, that’s cause for concern. Furthermore, most of the communities impacted are small towns where every dollar counts, so forfeiting fuel tax money has real impact.
Unfortunately, for many small communities the cost of the audit is greater than the cost of the financial penalty, so those towns are opting to take the hit rather than have their books examined.
We’re glad 87 percent of towns in Oklahoma are filing their audits, but wish the other 13 percent would join them. The challenges facing small towns are real, but balancing the budget by avoiding audits is poor public policy.
As goes Kentucky?
This year, Oklahoma Gov. Mary Fallin sought to slash the personal income tax to 3.5 percent from 5.25 percent by ending certain tax breaks. Beneficiaries of those breaks successfully fought off any change, but policymakers are expected to try again next year.
Maybe they’ll do better than Kentucky lawmakers. Stateline.org notes that tax reform has been an issue there for a decade with little to show for it.
As in Oklahoma, closing tax breaks is in the mix in Kentucky, including generous exemptions for pension income and sales tax exemptions for accounting, legal services, dry cleaning, limousine rides, landscaping and country club memberships.
Kentucky Democrats want to increase the income tax on the wealthy, while some Republicans want to eliminate it. In both states, beneficiaries of current policies have fought hard against change.
Unlike Kentucky, however, Oklahoma Republicans can’t blame the failure of tax reform on divided government — they run the whole show here.
Tax plan: Weigh to go
Last time Oklahoma tried to raise the gasoline tax, it ended with a bang. Voters shot down the proposal by a wide margin. Yet extending a “temporary” tax on gas ended last week not with a bang but a whimper. Gov. Mary Fallin signed a bill extending a 1-cent-per-gallon gas tax for another 10 years. The state taxes gasoline at 17 cents per gallon, of which 16 cents is an actual gas tax and the other penny a source of funding for the underground fuel storage tank program. But the fund isn’t just paying for replacement of storage tanks. It’s now buying new truck weigh stations at ports of entry around Oklahoma, something that was sorely needed. We don’t expect much more than a whimper of protest about Fallin’s OK for the gas tax extension, but the diversion of funds from their original purpose should always be weighed carefully.
D.C. debacle
Marion Barry (AP File Photo)
How much of a mess is the city council in Washington, D.C.? Even Marion Barry says it’s ridiculous. “We are the laughingstock of the nation,” Barry said at Wednesday’s meeting. In the past five months, two council members have resigned and pleaded guilty to crimes — one for stealing city money targeted for a youth program, the other for bank fraud. Meantime, federal investigators have been looking into city corruption. Barry is the District’s former mayor. While in that job, he was caught on film smoking crack cocaine and was convicted of marijuana possession. More recently he was prosecuted for not filing his taxes eight times in nine years. Councilman David Catania alluded to all that in responding to Barry’s laughingstock comment. “The worst perpetrators are sitting on this dais,” Catania said, noting that a “member of the (Finance and Revenue) Committee is a convicted criminal, hasn’t paid his taxes and yet he’s allowed to lecture others on ethics and vote on tax policy.” Zing!
New quarters (of a percent)
Note to the Greater Oklahoma City Chamber: The top personal income tax rate is 5.25 percent in Oklahoma, not 5.5 percent. That’s something a chamber of commerce would want to get right on a website touting the area’s low tax burden. The mistake is included in what is otherwise a first-class website called ABetterLifeOKC.com, designed to give new residents and those considering a move here key information about amenities. Given the hoopla over hosting NBA championship games, many are getting better acquainted with the city. Last year the website drew 11,000 visits and more than 8,000 unique visitors. The chamber also has a “Better Life” blog and an email newsletter. It says Boeing and Continental Resources were among corporations using the program to inform relocating employees about what the city has to offer. What the city doesn’t offer, fortunately, is a municipal income tax.
Photo by Paul B. Southerland, The Oklahoman Archives
Good for the goose …
Liberal activists have targeted business members of the American Legislative Exchange Council, a nonpartisan association of conservative state lawmakers dedicated to “limited government, free markets, federalism, and individual liberty.” Walmart is among those who’ve withdrawn after coming under fire. Now, some conservatives argue the Oklahoma Legislature should leave the National Conference of State Legislatures. From fiscal years 2005 to 2012, the state of Oklahoma paid over $1 million in dues to NCSL, which often lobbies for increased government spending and activism. “Oklahomans already have representation before the federal government — known as United States representatives and United States senators,” writes Jonathan Small, fiscal policy director for the Oklahoma Council of Public Affairs. “In addition, there are a multitude of state officials and lawmakers who represent the state. Membership in NCSL is unnecessary.” If private support of such groups is somehow despicable, how can one justify spending limited tax dollars on similar organizations?
Photo by Paul B. Southerland, The Oklahoman
A victory for transparency
Thanks to state Rep. Elise Hall, R-Oklahoma City, and state Sen. Josh Brecheen, R-Coalgate, the state bond advisor has added a website allowing citizens to review state bond information (www.ok.gov/bondadvisor/State_Debt/index.html). We believe this is a victory for transparency that will help inform future debates. We have urged lawmakers to use bond financing for basic government upkeep, such as the dire need for a new medical examiner’s office. What works for private citizens buying a home can work for state government addressing infrastructure needs. Bond opponents using the web site may note that Oklahoma has nearly $1.6 billion in existing net tax-supported debt, while supporters can cite Oklahoma’s healthy bond ratings and low ranking on net tax-supported debt per capita. Either way, the web site will allow for a more informed citizenry and debate. Well done.
Spring forward, fall behind
March and April take a big bite for some Oklahoma taxpayers. The second half of property taxes are due by March 31. State and federal income tax returns must be filed — along with any money owed — by mid-April. Taxes have a long history. A proverb from ancient Lagash in Mesopotamia goes, “You can have a Lord, you can have a king, but the one to fear is the tax assessor.” We quote this from Paul Kriwaczek’s new book “Babylon: Mesopotamia and the Birth of Civilization.” Taxes and civilization go together like spring and tulips. Whether in the ancient Fertile Crescent or in modern America, functionaries at all levels get a cut on the activities of daily living such as owning property, buying books like “Babylon” or, if the Obamacare legal challenge fails, simply breathing. Shekels were currency in the ancient world. Shackles is what comes to mind at tax time every spring.
Left: Tulip at Will Rogers Park (The Oklahoman Archives)
Order overdone
President Barack Obama speaks about energy at the TransCanada Pipe Yard near Cushing, Okla., Thursday, March 22, 2012. Photo by Nate Billings, The Oklahoman
President Obama used his recent trip to the Cushing area to tout an executive order fast-tracking the southern leg of the Keystone pipeline. He should have saved taxpayers the money. Critics pointed out that federal help wasn’t needed to move the project forward. National Journal’s energy and environmental experts agree. In a survey, 71 percent said this week that the executive order was unnecessary, and most concurred that the pipeline from Cushing to the Gulf Coast needs only local approval. The president’s involvement is “not even remotely necessary,” one insider said. Another said it “looks like federal government interfering in the traditionally local decision of land-use planning, and it likely won’t actually change the permitting process, which is already under way. Not great optics — and I say this as a fan of the president.”
