Two Left Shoes and Oklahoma's Revenue Failure

Two Left Shoes and Oklahoma’s Revenue Failure - January 3, 2016

State Representative David Perryman

Back in my college days, I had a class comparing economic systems from around the world. It was my first real exposure to the inefficiencies of Soviet industrial manufacturing and provided specific examples of factories that produced goods according to the demands of the government and not to the needs of its citizens.

Supply bore no relationship to demand and factories did ridiculous things like make left shoes only because the quota requirements focused on the number of shoes and not the number of pairs produced or customer satisfaction. Another example was window glass manufactured too thick to be transparent when quotas were based on weight and too thin to avoid shipping damage when the quotas were based on the number of windows produced.

There was no place in the inefficient Soviet model to consider the needs of its citizens.

Oklahoma voters have installed their own model of inefficiency.

At 12:01 a.m. on January 1, 2016, with declining revenues, underpaid teachers, deteriorating roads and bridges and thousands of untreated mentally ill citizens, Oklahoman voters, through their elected officials, cut personal income by nearly 5%, further crippling the state’s ability to address the needs of its citizens and imposing hidden taxes on those least likely to afford them.

The tax cut will not put any money in the pockets of the 20% of Oklahoma households that are poorest. The next 20%, those averaging $26,400 in household income will receive a state income tax cut of $8 for the year.

The middle 20% of Oklahoma households average $45,700 in earnings and will receive a personal income tax cut of $2.41 per month. The next 20% of households with average incomes of $73,800 will receive a cut of 22 cents per day.

The 15% whose income averages $126,800 will receive a decrease of $168 per year. 

If your household is fortunate enough to earn $263,000 per year, your state income tax cut will be a whopping $359 per year and of course that 1% of Oklahoma’s households earning $1,381,600 per year will see a healthy tax cut of $2,009.

Hidden taxes occur when we incur costs that we would not have had if the state had properly funded its services and whether your tax cut is $8 or $168 or even $359, it is likely not enough to cover them. Examples are the cost of a new tire (or wheel) when it is destroyed by a pothole or higher medical co-pays and costs because the state has sat on its hands and not provided ways to help citizens gain medical coverage.  

Mark Twain illustrated a hidden tax when he said, “Every time you stop a school, you will have to build a jail. What you gain at one end you lose at the other. It’s like feeding a dog on his own tail. It won’t fatten the dog.” Likewise, the cost of failing to treat the mentally ill leaves us at the very least with dysfunctional citizens and could contribute to increases in suicides or mass shootings.

Oklahoma voters have put themselves in a predicament where the state government has the same disconnect between goods and services and citizens needs as was evidenced in the old Soviet Union. It is the same disconnect that made factories in the Soviet Union produce pairs of shoes for left feet. There is one difference, attentive and engaged Oklahoma voters have the power to make government responsive to the needs of its citizens in 2016. Have a Great New Year.

For comments and questions, David.Perryman@okhouse.gov or 405-557-7401.