Sunday, November 8, 2015

Sales Tax Plan For Schools Reflects a Shift

Being Oklahoma reflecting on what I say about reductionist thinking.
Low taxes, low taxes... Well government has to run on something!
If Oklahoma is not going to raise taxes, then there should be a shift to
the sales tax going higher. Matthew 22:21 A good point noted!

That would be a fair thing to do being the failure and the need for surivial
from the taxes being lowered. It's about time they pay their fair share.

Noted the poor buys less than the rich guys. Food stamps have no sales tax!
Federal law prohibits sales tax from being charged on food stamp purchases.
http://dor.wa.gov/docs/reports/2000/tax_exemptions_2000/salesoth.htm


So the rich guy buying the Starbucks everyday vs 

the poor like me that would make something like
it but in a jar to save money would pay less 
sales tax as I buy less costly stuff! 
Fancy Starbucks!
http://fun2bfrugal.com/10-homemade-starbucks-drinks  

It's ok to raise the sales tax being the rich can 
afford it, and ends up in a naturalistic policy of 
low pay vs sales. 


Smashing as it is the sales tax going up would be needed with such a downfall of 
funding going on in Oklahoma! The whole school system would really go to hell
without doing something! That might not be so bad but really!
https://www.youtube.com/watch?v=hMG0C6m9i3E

~~~~~Boren Sales Tax Plan Reflects Shift in Oklahoma Tax Base
University of Oklahoma President David Boren’s proposed penny sales tax for
education reflects a fundamental shift in the way the state is paying for public schools,
higher education and other services. Economists interviewed by Oklahoma Watch
expressed concern about reducing the state’s reliance on income taxes and increasing
its dependence on sales taxes to finance essential state functions.

Boren said in an interview that he shared those concerns, but was convinced
Oklahoma’s public education system faces such big funding cuts that
“the education crisis trumps the tax policy question.”
“Our choice is to either do this or do nothing,” he said.

An Oklahoma Watch data analysis shows that income tax cuts approved by the
Legislature over the last 10 years have reduced state revenues by nearly
$1 billion a year, roughly the same amount as next year’s predicted budget shortfall.

Boren is leading a ballot initiative campaign to persuade Oklahomans to approve a
one-cent sales tax increase that would restore about $600 million a year in funding for
public schools and higher education. His group plans to file its petition language and
is expected announce its backers this week. If the group is able to gather enough
petition signatures, the penny sales tax would appear on the general election
ballot in November 2016.

If voters approved the measure, it would restore the education funds that have
been lost over the last decade. Analysts acknowledged that might be the only
practical way to address Oklahoma’s educational woes, but was not necessarily
good tax policy.

“Oklahoma has a regressive tax system, and the sales tax is a big part of that,”
said Carl Davis, research director for the Institute on Taxation and Economic Policy
in Washington, a nongovernment research group. ITEP did an analysis of Oklahoma’s
tax system showing that an average low-income family spends about 10 percent of its
budget on state and local taxes, compared with about 4 percent for high-income
families. Davis said Oklahoma is one of several conservative states, including
neighboring Kansas, which have been shifting from income taxes toward sales taxes
to finance core state services such as education, transportation, health and
public safety.

“It’s a trend that’s been going on for a number of years, mainly on the theory that
relying more on consumption taxes is better for state economies.
Whether that’s actually true or not is highly doubtful,” Davis said.

“What we do know [is that] when you move more toward consumption taxes…
it does increase the unfairness of state tax codes.”

Oklahoma’s top personal income tax rate has been raised and lowered many times
since the Legislature created the tax 100 years ago. The highest it ever got was
17 percent for some taxpayers from 1979 through 1988, according to
Oklahoma Tax Commission records.

Over the past decade, the Legislature has voted four times to reduce the top rate,
from 6.65 percent in 2005 to 5.0 percent today. Some of the reductions were
phased in over several years and subject to revenue growth triggers.

Tax Commission data shows that income tax reductions approved over the last
decade have reduced annual state revenue collections by more than $900 million
a year. If the state had enough revenue growth to trigger a final approved cut in
2018, it would cause an additional loss of $100 million or so.

At this point, with state revenues plunging because of lower oil prices, that scenario
appears doubtful. The Oklahoma Equalization Board won’t estimate next year’s
budget shortfall until mid-December, but preliminary speculation suggests it could
be as much as $1 billion.

The Boren plan would add another penny to the state sales tax, currently 4.5 cents.
(Cities and counties impose additional sales taxes.) The 1-cent increase would raise
about $600 million a year for public schools and higher education.

“We are facing, I think, really the dismantlement of public education in Oklahoma.
I don’t think that’s an alarmist statement,” Boren said.

“We could put to productive use a billion new dollars. Instead, we face a $1 billion
shortfall in the legislature. It’s very likely that there will be even more significant cuts
in education this year. If we’re 49th now, it’s very likely we’ll go to 51st after this year,
trying to close the budget gap. We’ll be at the bottom of the elevator shaft.”

Boren, a Democrat, said his group chose the sales tax because initial polling showed
that trying to raise education funds by increasing the income tax would be difficult and
divisive. But when pollsters queried voters about a sales tax for education, initial
support was nearly 70 percent among Republicans and Democrats.

“This is not where we started out,” Boren said, referring to the sales tax.
“It was the last option standing. It was the lesser of evils.
The biggest evil, I think, was to do nothing.”

Boren said it would be pointless to choose a different funding vehicle if it appeared
certain it would be rejected. “There’s no use even trying to do something unless it’s
bipartisan and has a chance of passage,” he said.

Boren said the petition would contain language designed to set a baseline level of
legislative appropriations. That would prevent lawmakers from simply reducing their
future education outlays to offset the sales tax revenue coming in, he said.

Mickey Hepner, an economist and dean of the University of Central Oklahoma
College of Business in Edmond, said he probably would sign Boren’s petition,
but wished Oklahoma had chosen a different path.

“We’re already a high-sales-tax state. Our sales taxes are already above the
national average. Our income taxes are below the national average, particularly after
we’ve cut them over the last decade,” Hepner said. Hepner said the Oklahoma Legislature
seemed to be following a trend of reducing income taxes in hopes that doing so would
stimulate economic growth. He said there was “negligible” evidence that such growth
actually had occurred, because the stimulative effect of reductions in income taxes was
offset by the contractionary effect of fewer expenditures by schoolteachers and other
recipients of state revenue in a balanced-budget environment.

“We should have known that cutting income taxes over the last decade would make it
much more difficult to fund core government services like education,” Hepner said.
“So the teacher shortage crisis that we’re in now was avoidable, had we not been
focused so much on tax cuts.”

It’s unclear how the sales tax plan will be received by various interest groups,
including cities and counties, social-service advocates and policy organizations.
In a written statement, Jonathan Small, executive vice president for the 
Oklahoma Council of Public Affairs, a conservative think tank, said Oklahoma
could increase teacher pay without imposing tax increases.
The state could cut non-core government spending and use the savings to pay for
the salary hikes, he said. "Also, given our state’s direct competition with Texas, 
we must eliminate the personal income tax for teachers just like we do for aerospace 
engineers in Oklahoma," Small said. (The state allows aerospace engineers to 
claim an annual personal income-tax credit of up to $5,000 for five years.)

Larkin Warner, a retired Oklahoma State University economist who has
advised the state on tax policy, said all states tend to rely on three major
sources of income to support essential services such as education: income taxes,
property taxes and sales taxes.

Because Oklahoma is an agricultural state, it has had a historical aversion to
property taxes, Warner said. Consequently, the state has one of the lowest
average property tax rates in the nation.

Now, Warner said, the state seemed to have decided that it doesn’t like income taxes
either, placing most of the burden of financing government on the sales tax.

“We just merrily go along cutting the income tax,” Warner said.
“We hate the property tax worse than poison. We’ve already ridden the sales tax to
where it’s way too high… We’re kind of in a pickle, and there’s no solution if we’re
committed to getting rid of the income tax, which appears to be the case.”
http://oklahomawatch.org/2015/10/19/boren-sales-tax-plan-reflects-shift-in-oklahoma-tax-base

***I also have to ask why haven't Oklahoma used it's "Rainy Day Fund"
to help pull the schools out. In education you get what you pay for and
the funding is low! So expect low until funding goes up!
https://stateimpact.npr.org/oklahoma/tag/rainy-day-fund

I also need to emphasize a personal opinion I have that schools need
to benchmark the kids parents before the kids takes the test!
There are too many confederate flags and Tea Party stickers on the
back of trucks in my town!
 

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