Sen. Jolley wins approval for plan to end state income tax; measure protects military, retirees

The full Senate has voted in favor of a measure to gradually phase out the state income tax. Senate Bill 1571, also known as the OCPA/Laffer Plan, was approved Monday, 30 to 17. Sen. Clark Jolley, R-Edmond, is the principal author of the legislation. He said one important change made since the bill left committee is an amendment that addresses concerns raised by retirees and Oklahomans in the military.

“As amended, SB 1571 has protections to ensure the plan will not impact the incomes of Oklahoma retirees or our military,” Jolley said. “I want to thank my fellow members for their support of this bill, which we will continue to refine as it moves through the legislative process.”

In the first year, Jolley’s bill would decrease the state income tax rate from 5.25 percent to 2.5 percent. No tax would be imposed on single filers with taxable income of $8,700 or less and for married filers with taxable income of $15,000 or less. After that, there would be annual reductions of .25 until the income tax is completely phased out in 2022. Beginning in 2013, individual tax credits, deductions and exemptions will be eliminated except for:

Active duty military compensation
Retirement benefits from public pension systems
Social Security benefits
Certain deferred compensation distributions
Retirement benefits from non-public pension systems
Military retirement benefits
Civil service retirement benefits in lieu of Social Security

“This plan enables us to create a more prosperous state, attracting businesses and high-paying jobs while continuing to ensure the core functions of government remain a top priority,” Jolley said. “Passage of this measure represents a major turning point in our efforts to build a better future for all Oklahomans.”

Senate President Pro Tempore Brian Bingman praised Jolley’s work on SB 1571, which now moves to the House for further consideration.
“Conservatives in Oklahoma have no greater friend than Senator Jolley-- he should be applauded for his proven commitment to putting more money back in the pockets of hardworking taxpayers,” said Bingman, R-Sapulpa. “Through a meaningful cut in the state income tax, and setting in motion the elimination of the tax over time, Senator Jolley’s bill will lessen the burden on our families while making Oklahoma more attractive to businesses that will create jobs in our state.”