Two years ago as I began my first session as a Legislator, the state was facing the largest budget shortfall in its history. Many of the bills dealt with tax increases and new taxes. Fortunately, none of the tax measures passed, and the state economy has rebounded and prospered. This year most of the attention is centering on tax cuts and even tax rebates. This is because this year there will be a surplus to deal with in the budgeting process.
The Speaker of the House and the governor have agreed in principle to a tax cut that would give every Oklahoman that paid taxes a rebate of $50.00 for those who filed a single return and $100.00 for those who filed a joint return. The rebates would come from the excess amount left over after the Rainy Day Fund is brought to its constitutional maximum.
The Speaker is also calling for a permanent reduction in the top tax rate of .4%. This would affect every Oklahoman that earned over $10,000 last year. It would bring the top tax bracket down to 6.25% not only for next year, but also in the years to come. The Speaker's proposal would continue the rebates in years whenever the rainy day fund exceeds its cap.
Several other tax measures also passed the House. One bill would reduce the estate tax for collateral heirs. This means that the siblings, nieces, or nephews of the deceased would also get a $200,000 exemption from the tax beginning in 2006. The exemption would increase to $1 million by 2010.
HB 1256 eliminates the marriage penalty by doubling the standard deduction for married couples to $4,000. HB 1230 establishes a one-week back to school state sales tax holiday in August. Cities have to option whether or not to also establish a week break.
Another bill that has been endorsed by Lt. Governor Mary Fallin would exempt retirement income for the state income tax beginning Jan. 1, 2006. This would provide 186.7 million in annual savings to Oklahoma's senior citizens.
House Bill 1228 would increase income tax exemptions for retirees, also. Single filers, who currently enjoy an exemption for the first $37,500 of income would see that amount increased to $50,000. Married couple and qualifying widows, who currently receive an exemption on the first $75,000 of income would see their exemption increased to cover $100,000 in income, beginning in the 2006 tax year.
Although these bills have passed in the House, they must still pass in the Senate and be signed by the Governor. However, it is apparent that the move to give tax relief to the citizens of Oklahoma is alive and well, It also attempts to target those who have retired and face a continued squeeze between a static income and spiraling health care costs. It is essential that we look after those in their twilight years who have sacrificed so much to look after us in our early years.
Boise City News