Stephen Moore, founder and former president of
Club for Growth, opines that the recently completed budget agreement is a mixed bag at best. Moore applauds the tax relief for Oklahoma taxpayers, but worries about the increased spending that is slated to accompany those tax cuts.
Sooner Tax Cuts Can't Come Soon Enough
Oklahomans will get a tax cut this year after all. Late last week
Democratic Governor Brad Henry agreed to terms with Republicans in the
legislature on a compromise that features $600 million in tax cuts over
the next four years. These include a roughly 20% reduction in the income
tax rate over four years and a three-year phase-out of the state death
tax.
That's a hefty and highly pro-growth tax cut for a state that has been a
perennial economic laggard. Oklahoma remains overly reliant on oil and
gas, which has led to periodic booms and longer busts. But today's $70
oil prices have made budget trade-offs suddenly seem like child's play.
Thus, for going along with the tax cut, Mr. Henry will get a whopping
$3,000 across-the-board pay raise for teachers -- twice what he had been
seeking for this traditionally Democratic voting bloc.
No wonder the free-market folks at the Oklahoma Public Affairs Council
say they're "not jumping up and down with joy" over the tax-cut deal.
Increased spending is still slated to soak up 75% of the bumper revenues
created by the oil boom. But the state's Democratic governor is smiling
-- Mr. Henry calls the budget deal "a very nice balance between
historical tax relief for all Oklahomans and in particular working
Oklahomans as well as record investment in education, in research
infrastructure, in health care, job creation, public safety and roads
and bridges."
Not all Democrats are thrilled. Even with 75 cents out of every dollar
going to higher spending rather than tax cuts, Senate President Mike
Morgan worries that Oklahoma has gone "tax-cut crazy." Unfortunately,
the state is a long way from that, but Sooner State taxpayers have at
least some reason to applaud a rare victory this year. Given the need to
boost the lagging non-oil sectors of the economy, even higher spending
may be a price worth paying for the stimulative tax cuts.
Posted at 6/26/2006 07:17:00 AM
