Yes, Income Tax Cuts Reduce State Tax Collections

Throughout the tax cut debate here in Oklahoma we constantly here that cutting the income tax actually boosts the economy so much that tax revenue increases. The data tell a very different story.

Since 2000 Oklahoma has enacted several income tax cuts. While Oklahoma personal income has risen by 75.40% during that time (according to the U.S. Bureau of Economic Analysis), Oklahoma income tax collections have risen by only 26.68%. Generally, we would expect income tax collections to slightly outpace the growth in personal income (due to bracket creep). But in Oklahoma we have seen income tax collections fall way short. In fact, if income taxes collections had risen just at the same rate that personal income has grown during the same period, state officials would have an additional $1 billion annually to spend on education, health care, roads, and prisons.

In short, the cost of tax cuts is real and significant.