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Frank Keating on Tax Reform
Former Republican OK Governor
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Government spending is not the government’s money
We understand that the money we spend here is not our money. It belongs to the men and women of our state who earn it day-by-day, hour-by-hour, for the purpose of putting their children through school,
permitting themselves to have a safe and secure retirement. This year we will have a significant surplus to spend or to give back in the nature of tax cuts. But look what we’ve done in the course of the last five years -- nearly six years now.
We have made significant progress in giving back some of the money to the people. We enacted the largest tax cut ever in state’s history. We cut the income tax from seven percent to six-and-three-quarters percent.
And, no great surprise, because we are permitting more Oklahomans to keep more of their money, our state is more prosperous than ever before.
Source: State of the State address to Oklahoma legislature
Feb 5, 2001
Lower state income tax rate from 6.75% to 3.75%
We have analyzed what has held us back, and one of those reasons is we tax everything. Oklahoma’s high marginal income tax rate chills savings and investment and it is at the same rate as the capital gains tax. So if you have a small business in
Oklahoma, you will leave the state to sell it and we will lose you, your productivity, your investment and your genius forever. That is unacceptable. I propose to cut the state income tax by half a point and to continue that half point cut over the
next six years. This will lower Oklahoma’s rate to 3.75%, which is lower than all of our neighbors, except Texas. Oklahoma’s current high marginal rate of 6.75% is a scandal. It is higher than Kansas, higher than Missouri, higher than Colorado. And, of
course, it is higher than Texas that has no tax at all. With a top rate kicking in at $10,000 for a single person, it is far more punitive to our lower income residents than even the tax systems of Arkansas and New Mexico. It’s time to lower it.
Source: State of the State address to Oklahoma legislature
Feb 5, 2001
Reduce and ultimately abolish the estate tax
We have talked about the estate tax and we have worked around the edges, but we haven’t done what we have to do. To save Oklahoma’s family farms and businesses, we need to become a federal pick up state and slowly,
but ever so surely, reduce and ultimately abolish the estate tax. It is a non-budget item; we can do it this year.
Source: State of the State address to Oklahoma legislature
Feb 5, 2001
No national sales tax or VAT.
Keating adopted the National Governors Association policy:
State tax policy is closely linked to federal policy. 36 states currently use either federal income or federal tax liability as the state tax base for personal income taxes. It is critical that Congress and the administration do not enact tax reform in a vacuum, but in consultation and in partnership with the nation’s Governors. - National Sales or Value-Added Tax The nation’s Governors oppose a national sales or transactional value-added tax. Such taxes would intrude into a tax area that has traditionally been reserved for and relied on by state and local governments. If enacted, either of these taxes would seriously threaten the ability of state and local governments to maintain their tax base.
- Current Income Tax If Congress decides to reform the current tax system, they should reduce the complexity of current income taxes; increase incentives to work, save, and invest; and increase efficiency and fairness. As part of any reform of the
current income tax, the nation’s Governors would oppose any modification to the deductibility of state income taxes, property taxes, and the interest on state and local bonds.
- Transition If major tax reform is enacted, it should not be implemented for at least three years, to give states ample time to adjust their own tax systems.
- Information Needs of the StatesThe ability of states to tax various revenue sources depends to a large extent on information that only the federal government can collect. This is becoming much more important given the complexity of both the international and domestic economies in tracing where goods and income are generated. It is critical that the federal government separate tax reform per se from the information that is collected from individuals, businesses, and corporations with respect to income generated. The data collection role of the federal government must be developed in partnership with state and local governments.
Source: NGA Executive Committee Policy Statement EC-9 00-NGA1 on Feb 15, 2000
Let states independently determine estate taxes.
Keating adopted a letter to Congressional leaders from 37 Governors:
We are writing to request equal treatment between states and the federal government on estate tax changes. Regardless of one’s view about phasing out the federal estate tax, the Governors are absolutely united in opposing any action that would discriminate against states in the phase-out of the state and federal estate taxes. This issue needs to be addressed before the Senate goes to conference with the House.
Governors believe that the ability of states to independently determine their own tax revenue policy is a basic tenet of federalism. Moreover, no federal tax bill should be enacted without close consultation with the states.
At the very least, there must be equity in the treatment of the state death tax credit in the tax bill the Congress considers with the proposed phase-out of the federal estate tax. Governors oppose provisions that impose disproportionate impacts on state revenue systems. The changes proposed by the Senate would have abrupt, significant adverse impacts on state revenues at a particularly onerous time for many states. The potential impact on states would begin next year and have a potential impact of between $50 and $100 billion over the next ten years.
We urge the leaders to respect those rights and to restore fairness.
Source: National Governor's Association letter to Congress 01-NGA19 on May 23, 2001