Fitness club fees tax break, taxes by states, 
Capitol Report for dailies for week of Feb. 18, 2007
By Jim Campbell
OPA Capitol News Bureau
With so little suspense that a press release was written in advance, a House committee voted to slash personal and corporate income taxes by more than $400 million over a two-year period to stimulate the economy.
Tax cuts in House Bills 1386 and 1388 were not part of the House leadership program, however. House Speaker Lance Cargill, R-Harrah, has said the leadership remains committed to the personal income tax reduction schedule approved last year but will not propose new cuts, at least until Tuesday's certification of funds by the State Board of Equalization.
In advance of that action, the Oklahoma Tax Commission reported that anticipated spending money available to the 2007 Legislature had plunged, partially because big tax cuts of the past two years had hit revenues harder than expected.
Cargill and Senate GOP Leader Glenn Coffee of Oklahoma City said the new tax commission figures validate their contention that Gov. Brad Henry's budget is based on too-rosy projections. Senate Co-President Mike Morgan, D-Stillwater, said "caution" must be the watchword.
A spokesman for Henry said the governor will continue to work with the realities of fiscal restraint.
Rep. Randy Terrill, R-Moore, House Revenue and Taxation Committee chairman, authored both new tax cut bills. 
Oklahoma City Democrat Richard Morrissette led the outgunned opposition as the panel endorsed cutting Oklahoma's top income tax rate from 5.65 percent to 4.65 percent by tax year 2009 for more than $394 million by tax year 2009.
Morrisette argued against further tax cuts in absence of credible evidence they will lead to a revenue increase through economic growth.
The committee also voted to implement a graduated corporate income rate with only companies earning more than $200,000 a year paying the current top rate of 6 percent.
Companies with less than $10,000 taxable income would pay nothing.
 "We've got to reform our tax code in Oklahoma if we want good jobs to stay in the state," Terrill said.
"Over the past two years, we reduced the state income tax by a full point, cutting it from 6.65 percent to 5.65 percent," he said. "House Bill 1388 sets a reasonable and achievable goal of reducing the income tax rate another one percentage point in the next two years.
Morrisette asked how the revenue would be replaced to meet current obligations to roads and bridges, teacher retirement, schools and other needs.
"Cut the tax rate, that's fine," Morrisette said. "But you are going to be stuck with the consequences."
"We've paid for all the tax cuts out of growth revenue and never had to cut services," Terrill replied.
Terrill argued that tax cuts of the last two years "are at least partially responsible" for the increase in growth revenue.
Morrisette said he saw no credible evidence the new proposals would spur development.
The corporate income tax cut was a request from the State Chamber of Commerce, whose vice president for government affairs, Ron Cupp, said it was intended to help small business, which he called "the backbone of the economy."
Under the sliding scale, firms earning $10,000 to $50,000 would pay a one percent tax, those earning $50,000 to $100,000 would pay 2.5 percent and those making up to $200,000 would pay 4.5 percent. The bill also exempts companies from the franchise tax if the amount owed is $250 or less.
Rep. Danny Morgan, D-Prague, House minority leader, voted against the bills but said the two other breaks in the personal tax bill are worthy and should be in stand-alone bills.
The tax commission dropped its estimate of growth from 10 percent to five to six percent and predicted a larger than expected loss from last year's tax cuts. State Treasurer Scott Meacham said it indicated the commission does not expect any economic stimulus from the last two years of tax cuts.
Meacham said he was not too concerned that collections in three of the four major tax categories failed to meet either prior year collections or the estimate.
"We expected a dip in gross production tax collections with the drop in energy prices," Meacham said. "Sales tax collections were likely affected by the ice storm that paralyzed most of the state during mid-January. Other indicators, however, show our economy remains strong."
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Oklahoma fares well in national rankings of total taxes paid, according to a report on the MSN Money Web site.
It places Oklahoma 40th in state and local taxes paid per capita, and 47th with addition of federal taxes.
Oklahoma also is among states paying the least property taxes, ranking 45th as a percentage of income and 31st in the tax as a percentage of home value. Texas, which has no income tax, ranks 15th in property tax as a percentage of income and second as a percentage of home value.
The report says a poll by the Tax Foundation said "no tax annoys Americans as much as the property tax," perhaps because the homeowner often has to write the check."
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A tax break advancing in the Senate was aimed at waistlines as well as wallets.
The Senate Finance Committee approved Senate Bill 118 by Sen. Mike Mazzei, R-Tulsa, providing an income tax credit equal to 20 percent of the cost of health or fitness club membership fees.
Mazzei said more than six out of ten Oklahomans are overweight and one of four is obese, creating a staggering cost to the state in health care
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