Debate on reducing state income tax

[jerrywall]

Federal tax cuts may work for a while but then always comes the recession as in President Bush's big one.

Have Bush's tax cuts been repealed yet? Or are they still in place?

[Bunty]

we should work to move into the bottom 1/4 in total tax burden

Here's a list of those bottom 1/4 states as of 2010. See any states you would rather live in, such as Texas?

41. South Carolina
42. Nevada
43. Alabama
44. New Hampshire
45. Texas
46. Wyoming
47. Louisiana
48. Tennessee
49. South Dakota
50. Alaska

[Bunty]

Do you know why tax cuts always end recessions?

No, not always. I don't recall Reagan's tax cuts doing much to end Oklahoma's oil recession during the 1980s. Some people had to leave the state during that decade. So a number of other things, perhaps more important, go into making a prosperous economy besides tax cuts. Tax cuts surely help the rich the most, since the amounts cut are always bigger.

I tend to agree with Jersey Boss.

[jn1780]

Do you know why tax cuts always end recessions?

Debt "ends" recessions. New recessions always have the debt used to "fix" the last recession added to the cost.

You wont find that many modern economist who disagrees with this. The problem comes when you can't grow the economy faster than the debt.

[ou48A]

No, not always. I don't recall Reagan's tax cuts doing much to end Oklahoma's oil recession during the 1980s.

That’s because the “oil recession” helped cure the national recession by putting more money in people’s pockets. It gave them more confidence to go out and spend the extra money they had. People also had far more confidence in their leaders than what we see with Obama’s polarization of the nation.

When so much of our oil is still imported this is why it’s basically insane to want high priced gasoline prices like Obama said he wanted…. It only goes to show how low his understand of the economy really is along with virtually all of his partisan supporters who also want high energy prices.

[Hawk405359]

The 80's recession ended when the OPEC oil monopoly went bust. Oil prices correlate really well to the declining economy, and when that bubble popped and they plummeted, the economy improved in lock step. Makes perfect sense too, higher-than-ever oil prices are going to hurt every company, and immediately after a bust, there's going to be a spending bonanza to get it while it's good. Reagan got to take the credit, but his policies most likely had very little to do with it, aside from continuing the previous presidents' energy policies.

[ou48A]

The 80's recession ended when the OPEC oil monopoly went bust. Oil prices correlate really well to the declining economy, and when that bubble popped and they plummeted, the economy improved in lock step. Makes perfect sense too, higher-than-ever oil prices are going to hurt every company, and immediately after a bust, there's going to be a spending bonanza to get it while it's good. Reagan got to take the credit, but his policies most likely had very little to do with it, aside from continuing the previous presidents' energy policies.

Regan’s deregulation of oil had a lot to do with its price decline. Regan’s deregulation of crude oil was part of why OPEC’s oil monopoly went bust for a time. That and OPEC’s over production that was designed to punish Iran and the USSR.

[Hawk405359]

Deregulation was originally Carter's policy, and it was set to go into effect in 1981 anyways. Reagan just accelerated it by a couple of months when he entered office. The biggest reason why prices went up during the Carter administration, even with policies, is that the Iran/Iraq war halted much of the oil production. Both Iraq and Iran started producing again in the early-mid 80's, which helped matters. Reagan just happened to be in office to reap the benefits. I mean, I give him credit for recognizing that Carter's policy was needed and not instinctively tossing all their predecessor's ideas like you'd expect, and people definitely responded to Reagan a lot better than they did Carter, but Reagan's economic success was as much being in the right place at the right time as anything else.

And that tends to be how the national economy usually moves.

[ou48A]

Deregulation was originally Carter's policy, and it was set to go into effect in 1981 anyways. Reagan just accelerated it by a couple of months when he entered office. The biggest reason why prices went up during the Carter administration, even with policies, is that the Iran/Iraq war halted much of the oil production. Both Iraq and Iran started producing again in the early-mid 80's, which helped matters. Reagan just happened to be in office to reap the benefits. I mean, I give him credit for recognizing that Carter's policy was needed and not instinctively tossing all their predecessor's ideas like you'd expect, and people definitely responded to Reagan a lot better than they did Carter, but Reagan's economic success was as much being in the right place at the right time as anything else.

And that tends to be how the national economy usually moves.

You are correct about the deregulation issue and I stand corrected.
Thank you.

Carters energy decisions had far more common sense than we see today from this White House.

This is a pretty fair look back at some of the Carter energy decisions and more.
American President: Jimmy Carter: Domestic Affairs

[venture]

What would we say is the biggest obstacle then right now getting oil prices down for every day consumers? I would almost have to say it has to be refining capacity being limited. What was it, just this year was the first time an approval was given by the Gov't to build a new refinery in 30 years? Say we are able to start refining product much faster, build up supply domestically, and therefore be less exposed to oversea oil products. If prices drop to where you could fill up paying $1.50/gal - how many would actually support that? Obviously anyone would love to have that again, but I could see major objections coming from oil producing states that haven't diversified their economies enough.

It almost seems more than anything, we just need to get production back up which likely starts with refining capacity.

[Bunty]

With a number of industrialists looking at Oklahoma to open up new plants, I would suggest Chamber of Commerces in the state hold a convention to compare notes to find out why industries decide not to come to Oklahoma. It would be interesting to see if the amount of the state income tax being too high is a common complaint. This assuming Chamber of Commerce heads get the inside word on this subject. Anyway, I wouldn't be surprised if it's mainly rich CEOs already here asking legislators for income tax cuts.

[ou48A]

I would imagine that it was those evil rich CEOs who were asking for certain tax cuts so they can decide where they want to relocate or build up company jobs.

[venture]

Eh. Put in a flat sales tax or something similar...get rid of all income and property tax and call it good. Of course that would essentially eliminate a major incentive communities use to lure businesses from other locations.

[ou48A]

What would we say is the biggest obstacle then right now getting oil prices down for every day consumers? I would almost have to say it has to be refining capacity being limited. What was it, just this year was the first time an approval was given by the Gov't to build a new refinery in 30 years? Say we are able to start refining product much faster, build up supply domestically, and therefore be less exposed to oversea oil products. If prices drop to where you could fill up paying $1.50/gal - how many would actually support that? Obviously anyone would love to have that again, but I could see major objections coming from oil producing states that haven't diversified their economies enough.

It almost seems more than anything, we just need to get production back up which likely starts with refining capacity.

What we want is a fair and balanced price.

You don’t want prices so low that exploration for oil & gas activity ends because that only sets us up for large and destructive price spikes a few years later. Obviously you don’t want them to high or they harm the economy.
Speeding up the construction of pipelines helps since they are the safest, cheapest most reliable method to move crude oil along with most of their liquid products. These bottle necks have been creating big price differences in the USA and have hindered the recovery in some locations.

We should and can further minimize our risk to Geo political and WX events where ever possible.
Just a guess but somewhere around $ 3.00 is probably close to a fair price for gasoline in today’s world.

[onthestrip]

I would imagine that it was those evil rich CEOs who were asking for certain tax cuts so they can decide where they want to relocate or build up company jobs.

CEOs don't care what their employees pay in personal income taxes. That has no bearing on their business, therefore it's not a factor. What does matter is a skilled, educated workforce, a high quality of life, and access to capital.

It's time for Oklahoma to be done with the tax cuts and start investing in ourselves.

[ou48A]

CEOs don't care what their employees pay in personal income taxes. That has no bearing on their business, therefore it's not a factor.

Yes they do!

You obviously have not had enough exposure corporate CEO’s and how they negotiate when relocating to a different state.
They know that great employees are hard to come by. A CEO’s wants to know exactly what their employee compensation cost are be. They know that low taxes for their employees means they don’t need to pay as much as in a high tax state for their employees to keep the same standard of living. They want to keep there good employees. Employee compensation impacts the corporations bottom line and sometimes the compesation of the CEO no matter where he/she lives and works.
Certainly there are other factors but a state’s tax burden on employees is a factor to be considered.

[ThomPaine]

What would we say is the biggest obstacle then right now getting oil prices down for every day consumers? I would almost have to say it has to be refining capacity being limited. What was it, just this year was the first time an approval was given by the Gov't to build a new refinery in 30 years? Say we are able to start refining product much faster, build up supply domestically, and therefore be less exposed to oversea oil products. If prices drop to where you could fill up paying $1.50/gal - how many would actually support that? Obviously anyone would love to have that again, but I could see major objections coming from oil producing states that haven't diversified their economies enough.

It almost seems more than anything, we just need to get production back up which likely starts with refining capacity.

World petrol prices, gas prices, diesel prices 2013| MyTravelCost.com

I like cheap fuel too, but why do you feel we don't already pay a fair, low price? Globally, we're very near the cheapest (especially in places you would actually want to live).

[Rover]

Yes they do!

You obviously have not had enough exposure corporate CEO’s and how they negotiate when relocating to a different state.
They know that great employees are hard to come by. A CEO’s wants to know exactly what their employee compensation cost are be. They know that low taxes for their employees means they don’t need to pay as much as in a high tax state for their employees to keep the same standard of living. They want to keep there good employees. Employee compensation impacts the corporations bottom line and sometimes the compesation of the CEO no matter where he/she lives and works.
Certainly there are other factors but a state’s tax burden on employees is a factor to be considered.

Location or relocation decisions are often much more complex than portrayed in this thread. I have been integrally involved in two, including one from Europe. Each company has there own reasons...but the top tax rate for the CEO or other employees hasn't been a concern. Things like overall tax burden for the company is important. Availability and cost of qualified employees, the cost of real estate, the legal environment, the cost of real estate, state and local incentives, possibly state assistance in training, workers comp rates, consumer protection laws, availability and cost of professional services (patent attorneys, technical labs, etc), location of synergistic companies, availability of financial services, airport and other transportation services, strategic logistical issues, and on, and on, and on. Boiling it down to one or two reason driving is is a gross oversimplification and a total lack of understanding. Remember, if you can't make a profit, taxes don't matter.

That said, a privately owned Simple business with one or a few owners and very few other considerations may be driven by their personal taxes. In that case, if that is the driver then they aren't worried about their employees. They are probably low skilled, low pay employees anyway.

[ou48A]

Location or relocation decisions are often much more complex than portrayed in this thread. I have been integrally involved in two, including one from Europe. Each company has there own reasons...but the top tax rate for the CEO or other employees hasn't been a concern. Things like overall tax burden for the company is important. Availability and cost of qualified employees, the cost of real estate, the legal environment, the cost of real estate, state and local incentives, possibly state assistance in training, workers comp rates, consumer protection laws, availability and cost of professional services (patent attorneys, technical labs, etc), location of synergistic companies, availability of financial services, airport and other transportation services, strategic logistical issues, and on, and on, and on. Boiling it down to one or two reason driving is is a gross oversimplification and a total lack of understanding. Remember, if you can't make a profit, taxes don't matter.

That said, a privately owned Simple business with one or a few owners and very few other considerations may be driven by their personal taxes. In that case, if that is the driver then they aren't worried about their employees. They are probably low skilled, low pay employees anyway.

The Wall Street Journal and other national publications extensively quoted a person who was integrally involved in recruiting several large corporations to the Dallas area including one that brought at the time the world’s largest corporation to Irving TX from NYC. I’m related to this person and had the opportunity to talk to them for many hours on several occasions about the details of the relocation negations on this deal and others.

Sometimes it was a personal interest of a CEO or of other high ranking employee that won that key person over. No Texas state income tax and a lower overall tax burden compared to NYC was a significant factor and because they were so discussed at the time at recent tax increases in NYC it won a number of key people over. The world largest corporation at the time knew that lower taxes along with a lower cost of living would help their employee’s lives improve and at a lower cost to the company.

As I said, there are other factors, you listed many of those other factors. The DFW airport and its easy cheap flying opportunities was also a significant factor in several Dallas area relocations. (We need to do better with our airport.)

The case I am mostly talking about is very near the top of the food chain when it comes to relocations.
Certainly others would have different requirement and goals.

[onthestrip]

Yes they do!

You obviously have not had enough exposure corporate CEO’s and how they negotiate when relocating to a different state.
They know that great employees are hard to come by. A CEO’s wants to know exactly what their employee compensation cost are be. They know that low taxes for their employees means they don’t need to pay as much as in a high tax state for their employees to keep the same standard of living. They want to keep there good employees. Employee compensation impacts the corporations bottom line and sometimes the compesation of the CEO no matter where he/she lives and works.
Certainly there are other factors but a state’s tax burden on employees is a factor to be considered.

You are telling me you've been in the room with so many CEO's during there relocation comparisons..? Right. Would certainly be surprising since you cant even see through grossly misleading graphs, like the one you posted.

As Rover said, personal income tax is so far down on the scale of importance. Property and sales tax is much more important. Even more so is educated, healthy employee pool, transportation quality, access to capital, and quality of life. Besides, the tiny amount that personal income taxes might come into play...Oklahoma certainly wont be viewed as negative with our already low income tax rate. We can stop reducing it now and start putting our money to good use.

Or if you want to reduce it so bad ou4a, I wouldnt mind if we stopped giving away hundreds of millions in tax breaks to your beloved oil companies.

[ou48A]

Everybody in Oklahoma who is interested in living decent lives in decent comunitys should be interested in the health and welfare of our states oil & natural gas industry. Only a fool wouldn’t be.




The following is according to the May 2012 Oklahoma’s Oil and Natural Gas Industry Economic Impact and Jobs Report

The Oil & NG produced $52 billion in gross state product, or one out of every $3 in GSP.

$28 billion in state personal income, or one out of every $5.

344,503 jobs, representing one out of every six jobs in the state.

a statewide average compensation per job of more than $113,000.

in 2011 set off long run fiscal impacts estimated to be:
Nearly $1 billion in direct gross production tax payments,
including $504 million in oil gross production taxes and another $459 million in natural gas gross production taxes.

o $2.35 billion in Federal Personal Income Tax payments.
o $700 million in State Personal Income Tax payments.
o $563 million in State Sales Tax payments.
o $503 million in Local Sales Tax payments.

[Bunty]

OSU raised a billion dollars in several years. Since raising taxes isn't an option, Oklahoma should try doing the same type campaign as a means to raise money to provide better for vital government services. The more money raised this way the more sense it would make to further cut income tax.

[onthestrip]

Everybody in Oklahoma who is interested in living decent lives in decent comunitys should be interested in the health and welfare of our states oil & natural gas industry. Only a fool wouldn’t be.




The following is according to the May 2012 Oklahoma’s Oil and Natural Gas Industry Economic Impact and Jobs Report

The Oil & NG produced $52 billion in gross state product, or one out of every $3 in GSP.

$28 billion in state personal income, or one out of every $5.

344,503 jobs, representing one out of every six jobs in the state.

a statewide average compensation per job of more than $113,000.

in 2011 set off long run fiscal impacts estimated to be:
Nearly $1 billion in direct gross production tax payments,
including $504 million in oil gross production taxes and another $459 million in natural gas gross production taxes.

o $2.35 billion in Federal Personal Income Tax payments.
o $700 million in State Personal Income Tax payments.
o $563 million in State Sales Tax payments.
o $503 million in Local Sales Tax payments.

No one is arguing how much this state benefits from the oil in the ground but here you are championing personal income tax cuts, this time only for the top 62%, all the while oil companies in our state get gross production tax breaks to the tune of hundreds of millions of dollars. Im just pointing out the facts, not trying to debate how great oil companies are for us.

[ou48A]

No one is arguing how much this state benefits from the oil in the ground but here you are championing personal income tax cuts, this time only for the top 62%, all the while oil companies in our state get gross production tax breaks to the tune of hundreds of millions of dollars. Im just pointing out the facts, not trying to debate how great oil companies are for us.

The state incentives mean more drilling, more wells, creating more revenue for the state and the economy, which creates more jobs and keeps people employed.

Since these drilling rigs could easily be used in some other state or shipped to other countries these tax incentives easily pay for them self’s. It’s smart economics by our states leaders that has helped insulate our state from the worst recession since the great depression.

[ou48A]

OSU raised a billion dollars in several years. Since raising taxes isn't an option, Oklahoma should try doing the same type campaign as a means to raise money to provide better for vital government services. The more money raised this way the more sense it would make to further cut income tax.

Oklahoma needs a Legacy Fund that is funded by oil & NG tax revenue that would only kick in when prices reach a certain high water mark. For example if crude or NG was at very high prices the state would divert some of this additional state revenue to a Legacy fund that would act much like an endowment. It would stop when prices fell below a set amount adjusted for inflation.. This is one way we could better reinvest in other areas that help our economic situation….like better universities.

If managed well we can make this boom last virtually a life time.
Several states have their version of a legacy fund