Lawmakers propose new tax cut

OKLAHOMA CITY — Just days after OU president David Boren called for a moratorium on further cuts and more investment in higher education, two state lawmakers announced they’ve filed legislation to exempt most overtime pay from state income tax.

But at least one area lawmaker said he has concerns about the idea.

State Senator Kenneth Corn, D-Poteau, and Rep. Bud Smithson, D-Salisaw, held a Capitol press conference Monday to say they’d filed a measure “to help ensure Oklahoma workers would keep more of their hard earned dollars.”

The proposal —  Senate Bill 1132 — would exempt most overtime pay from state income taxes required by the federal Fair Labor Standards Act (FLSA). 

“We’re talking about a tax break that will make a meaningful difference to the many Oklahomans and their families who work hard, but still live paycheck to paycheck,” said Corn, D-Poteau. “If they keep more of their overtime pay, it’s money that’s going to go straight back into the local economy for food, groceries, clothing and other necessities. It’s a win-win proposal.”

Corn said the exemption would apply to most employees who are paid by the hour but not apply to employees who are exempt from the FLSA overtime mandates — that is, executives, professionals or administrative employees.

However, Norman Democrat Wallace Collins said he’d like to know what the impact would be on the state or if both lawmakers were “simply cutting taxes.”

“While I think that we’ve cut taxes about all we’ve needed to cut them, a tax exemption (like the overtime proposal) would benefit working people,” Collins said.

People who are paid overtime, he said, “are certainly not CEOs and managers and people like that. And a bottom-up tax break could be beneficial.”

Collins said he preferred tax cuts that came “from the bottom up.”

“I do support the idea of trying to help working people,” he said. “But I’d kinda like to see tax cuts come from the bottom up and not the top down.”

The proposal comes on the heels of a call by Boren to put a moratorium on further tax cuts and “more investment in higher education.”

“I think we ought to have a moratorium on tax reductions right now,” Boren said in an interview with The Associated Press. “I think we’re bumping the limits and I think we certainly don’t need to proceed down that path.”

Boren, a former Democratic governor and U.S. senator, authored legislation to abolish the inheritance tax between spouses at the federal and state levels.

The state’s recent tax cuts, he said, will reduce state revenue by more than $600 million a year, about “as far as the state should go.”

“We’ve pushed the tax cut envelope about as far as possible and I think what people in Oklahoma really want is excellence,” Boren said. “It’s very tempting to give in to the Siren song of tax cuts. I realize that,” he said.

The lawmakers said they had also filed a companion measure, Senate Concurrent Resolution 43, calling on Congress to enact similar legislation at the federal level. Both measures will be considered when the 2008 legislative session convenes in February.

But while Boren and Collins were cool to the idea, Republican leaders in the Oklahoma Senate said they are willing to consider the proposal. 

“The idea of exempting overtime pay from income taxes is being promoted nationally by prominent Republicans like former Speaker Newt Gingrich, and it is an idea Senate Republicans are willing to consider here in Oklahoma,” Senate Co-President Pro Tempore Glenn Coffee said in a media release.

“Oklahoma’s income tax rate is too high, so we are continually looking for ways to reduce the tax burden on Oklahoma families,” he said.