Friday, April 6, 2018
End the Capital Gains Tax Break
homes, cars that have $500 oil changes yet have people scared of a penny tax
to fund education. Yet push on a cigarette tax, a poverty tax. Not a good revenue
source at all. Taking the food money to get cigarettes makes less sales!
The capital gains tax needs to go! Look where tax cuts takes you!
~~~~~2018 Policy Priority: End the Capital Gains Tax Break
Oklahoma allows a 100 percent deduction from state income tax of any gains from the sale of property located in Oklahoma or stock of a company headquartered in Oklahoma. This Oklahoma capital gains deduction was enacted in 2004 as part of State Question 713, which also increased the cigarette tax.
A recent study by PFM Group Consulting for the Oklahoma Incentive Evaluation Commission found that over the past five years, Oklahoma’s capital gains deduction has reduced state tax revenues by $474 million while creating just $9 million in additional tax revenue – for a net cost of $465 million. The study also found that on average, 85.5 percent of the total deduction amount was claimed by individuals with income equal to or more than $200,000.
The PFM Group study concluded that the capital gains tax break cannot “be credibly shown to have significant economic impact or a positive return on investment for the State.” Based on this analysis, the report recommended repealing the tax break. The Legislature should heed this recommendation and end the capital gains tax break. If they are not willing to repeal the tax break outright, then the deduction could be narrowed by limiting it to investments in certain sectors, requiring that gains be reinvested in Oklahoma, or only allowing the exemption for individuals with income below a certain threshold.