Category: ‘Fair Taxation’

Sales Tax Instead of Income Tax? Yes Please.

June 29, 2010 Posted by E. Zachary Knight

During the next few months, the Oklahoma Legislative Committees will be studying various proposals and items of interest for the upcoming 2011 Legislative Session. Of these studies, there is one that really stood out to me for two reasons. This study is described as “Flat-rate state sales tax in lieu of income tax”

The first reason this study interests me is that it is key to my proposed tax reform for the state. The second is who is performing the study.

Why a Sales Tax is Better than an Income Tax

The income tax adds unneeded hardships for people in this state. It reduces the amount of money that can be spent by the people who earn it. It decreases the ability for employers to hire new workers, as they have to pay their current employees more to offset taxes.

Additionally, we are subject to both an income tax and a sales tax in this state. So we are in essence being taxed twice. Once on our ability to earn an income and a second on our ability to spend it.

I propose that we eliminated our income tax and replace it with the sales tax.

Why would this be better than ourĀ  current system? For one, we would only be taxed once. This is the key. We would no longer be taxed on our ability to earn an income. This means that we have more money to spend.

It is also more fair. Since we are now being taxed on our ability to spend our income, the tax burden is more fairly distributed. Since those that earn a higher income can spend more, they will pay more in taxes. Those with less income will spend less and pay less taxes.

You get to keep your money if you don’t spend as well. If you decide to put your money in a savings account, that money will not be taxed until you decide to spend it. That means you will have more money to save towards retirement and emergencies.

I will not lie to you. If we do switch to just a sales tax, it will go up. That is an inevitable part of the change. We have to supplement the loss of income from the income tax. Yet, if we can work to decrease the amount of money the state pays in bureaucracy, that increase will be minimal.

Another benefit to a state that relies on a sales tax rather than an income tax is that the state now has a greater incentive to promote strong economy and commerce. If the state relies on people spending money in order for the government to have money, they will be more willing to pass legislation that attracts businesses and workers. That is what will bring in more money to the state.

This legislative session ended with a deficit. In order to remedy that deficit, the legislature made it more difficult to do business in the state for some areas of commerce. Why would those businesses want to come here? If we make this change and begin working on better commerce legislation, they will want to come here.

Who Is Performing the Study

As I said earlier, there are two reasons I am interested in this study. The first was the study itself and what it means for us. The second is who is performing the study.

This study has been assigned to the House Appropriations and Budget Committee. What makes this important is that my opponent, Scott Martin, is Vice Chair of this committee. I will be following this study closely and will carefully review their conclusions.

Regardless of the outcome, if elected I will be pushing for this key change to our State economy. I feel that this will not only increase the income the government has to spend, but also improve the lives of the people that live here.