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Jordan Green's Comments

               November 24, 2017               

 

Jordan Green November 13 at 8:00am ·

It’s back to the used, abused, and well-worn drawing board for the Oklahoma Legislature after another week of Special Session. After nearly six weeks, Oklahomans who require government services of any form are frightened by the thought of losing vital assistance.

The Legislature was tasked with funding teacher pay raises and funding the Department of Mental Health – goals which are critical to the future of our state. But so far, nothing.

On November 8, the House did not pass House Bill 1054, which had been deemed by many as the Legislature’s last opportunity to fill the $215,000,000 budget hole. The bill was a conglomeration of taxes: a tax on alcohol, one on cigarettes, another gas tax, and even a gross production tax increase.

Was House Bill 1054 the Legislature’s last chance to raise taxes? Maybe. However, if that’s the case, it’s a blessing.

Proponents of raising the cigarette tax claim that raising it curbs smoking. However, according to an August 2017 article published by truthinitiative.org, those with mental illnesses are "estimated to account for 40 percent of cigarettes smoked in the U.S., despite only making up 25 percent of the population." So, raising the tax heavily affects the mentally ill. Just what the State should do more of, right? Not.

Our neighbor state, Colorado, has had cigarette tax disputes in recent years. Often cited in a rebuttal of the tax increase is the fact that raising the tax also affects those with lower incomes. According to priceeconomics.com’s article entitled "How Cigarettes Tax the Poor," families with an annual income of less than $30,000 have a smoking prevalence of 33.7 percent – in spite of cigarette tax increases of the last few decades.

This is where the argument against higher cigarette taxes comes full-circle. As tobacco is an addictive substance, higher cigarette taxes – simple monetary figures – do little to reduce smoking rates. Economists Kevin Callison and Robert Kaestner found from data in the Current Population Survey that, for every 1 percent increase in the price of cigarette packs, the overall rate of cigarette consumption decreases by no more than .07 percent.

This year, the Legislature has tried numerous times to raise the cigarette tax. Numerous. Times.

And the one time they did pass it, it was found unconstitutional. Maybe that’s a sign.

Clearly, raising the tax is counterproductive, and unfair: It primarily affects those with lower incomes and those with mental illnesses. Is that really the best thing for the State? To rob the poor and mentally ill of more money while their healthcare programs are being cut or completely removed?

As oil production is such a large factor in the Oklahoma economy, raising gross production taxes on it seems logical at first glance. But like cigarette taxes, raising taxes – again – has more cons than pros.

Lower taxes are proven to "free up" economic investment, especially when it comes to oil production. Put simply, the lower the production tax, the more drilling. Thereby more jobs are created and, more oil is sold, and more taxes are collected by the state.

Earlier this year, "The Daily Oklahoman" pointed out that State Treasurer Ken Miller conducted a study to analyze the effects of a seven percent gross production tax - more than double the current assessment - and he concluded: "Principles of supply and demand suggest that production would decline due to a higher tax rate’s impact on profit margins."

While the gross production tax included in House Bill 1054 was only a one percent tax increase on certain wells, it’s still a tax increase; it is still subject to the laws of supply and demand, regardless of its lifespan or rate.

Looking at the facts, raising taxes on cigarettes and oil production would have extraordinarily adverse effects on the State. Even if the budget hole were magically plugged by raising taxes, the populations that would be affected most negatively are the very populations that need it the least!

Legislators, please don’t kick the poor and mentally ill while they’re down. Their healthcare has already been cut. And please don’t bite the hands that feed our economy.

Instead of raising taxes, legislators should look to cut tax incentives. There are some incentives that yield profound benefits, such as tax credits to rural fire departments. And those should remain. But incentives like the Quality Jobs Act, which pays out roughly $82,300,000 annually, could be done without – especially during times of crisis - like the one we are currently attempting to survive.

 

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