The Oklahoma Senate approved House Bill 1539, which would trigger an income tax cut if state revenue collections exceed certain thresholds. The bill passed largely along party lines and will return to the House for final approval. If enacted, it wouldn't result in an immediate cut but would reduce the tax rate by 0.0025% if revenue increases by $300 million or more.
Democrats opposed the bill, raising concerns about potential negative impacts on state services and the short timeframe for implementation (December, before the February legislative session). They argued that the tax cut disproportionately benefits wealthier taxpayers and creates a risk of insufficient funds for critical services like education and law enforcement.
The Oklahoma Tax Commission also highlighted potential logistical challenges due to the bill's December trigger, affecting timely updates for employers' income tax withholding.
Governor Stitt has been advocating for an income tax cut for years. This bill represents a step towards his goal of eventually eliminating the income tax, although legislative leaders have indicated a complete cut is unlikely given the current revenue situation.
Supporters, including Senate President Pro Tempore Paxton and several Republican senators, argue that the bill is fiscally conservative and a sound approach to gradually reduce the income tax. They contend that cutting taxes stimulates economic growth.