
How Oklahoma Will Get Tax Revenue if Income Tax is Eliminated
Oklahoma Governor Kevin Stitt once again made it a point to talk about eliminating the state income tax in his State of the State speech on Monday. It's not the first time he's proposed the idea, and while it sounds like a 4.5% raise to every working Oklahoman, you have to keep one thing in mind.
There is a pertinent saying in every state, territory, and country across the globe. Never trust a politician with your money.
@koco5news During his State of the State address, Gov. Kevin Stitt talked about how he has a plan to eliminate income taxes in Oklahoma. #Oklahoma #news #KevinStitt #Taxes #koco5 ♬ original sound - KOCO 5 News

Add to that, no government has ever willingly opted to continue operating on less tax revenue. Like the price of eggs and rent, the cost just keeps going up.
In fact, groceries might be the best analogy for this whole cutting state income tax thing.
After a few years of being raked over the coals at the store, I'm finally back to buying steak again. That's not to say it's at pre-Ukraine money printing prices, but it has come down quite a bit in the last few months. As happy as that makes me, eggs have skyrocketed.
Lower price on one, higher price on the other, it's a net-zero gain on the grocery bill... Following?
We've talked about this in length in the previous years, but it's worth talking about it again since we're all a little tired of reading about the next Oklahoma ice storm or blizzard that "might" happen.
Odds are if our income tax is cut to zero, our Oklahoma legislature will just raise the taxes somewhere else to make up the difference.
Our little brother neighbor to the South - Texas - has seen this happen. They eliminated state income tax in 1993. Since then their assessed property taxes have skyrocketed. That's partly to blame for the Lone Star State nearly doubling its population since 93, but it's not the just Permian Basin and big cities driving the costs up.
Take the sleepy little town of Bells, Texas for example.
Bells is a typical small, rural Texas town of 1500 people. It's not close enough to Lake Texoma to be considered a lake town, nor is it nice enough to be considered a desirable or in-demand place to live. The Bells City Hall is a Morton Building... a typically, rural tiny Texas town.
Since data is easily available all the way back to 1993, let's compare the last 25 years of property taxes in this short time of income tax freedom.
In 1999, the total net taxable property values in Bells were assessed at a little over $23 million from a combined 753 properties within city limits.
In 2024, with a supermassive growth spurt to - checks notes - 872 assessed properties, the combined net taxable total is a shocking $146 million.
Now to be fair, over that time there have been some really nice homes built there, probably because it's close enough to Sherman to be considered "metro," and land by the acre has skyrocketed 20X over the same period of time... but adding $123 million in taxable property values is a considerable jump.
It's the same story across Texas over the last thirty years of income tax freedom. Record revenues for the state alongside worse roads (worse than Oklahoma) and worse schools that are woefully underfunded (sounds familiar right?).
Cut the head off the snake, two more shall take its place.
A government will never cut a tax without one or two taking its place.
The same can be said of our neighboring states. In fact, 2025 has been a popular year for states all over the country to cut state income taxes.
Louisiana is cutting income tax, favoring a little increase of their flat tax on all goods to 5%.
Iowa, Indiana, Missouri, Nebraska, Mississippi, North Carolina, and West Virginia are also following a similar income tax cut to that proposed by Governor Stitt yesterday. A few tenths of a percent here and there with plans to eventually eliminate income taxes altogether... all will recent or planned tax hikes in other partitions of goods and services.
The direct Texas-Oklahoma comparison.
Oklahoma - 4.5% sales tax on all non-grocery goods purchased.
Texas - 6.5% on the same goods.
Vehicles in Oklahoma - 3.5% excise tax.
Texas - 6.5% on the exact same vehicles.
The median property tax in Oklahoma is 0.87%, lower than the national average. The lowest property taxes in the state are found in Murray County. The tax rate on your lovely three-bedroom ranch-style home in Sulphur is a staggeringly low 0.41%... On the other hand, if you called Norman home, your property would be taxed at 1.16%.
The median property tax in Texas is 1.69%, higher than the national average of 1.07%, and it varies by county just as it does in Oklahoma. If you lived in the far west Texas town of Gail, your property taxes would be a paltry 0.34%. Obviously, that's the benefit of living in the middle of nowhere... but all the same, if you lived in the hipster village of Muleshoe, all property is taxed at a whopping 2.23%.
The same can be figured across the board in Texas - use tax, road tax, fuel tax, etc... and the fact it's equal for everyone regardless of income makes Texas taxes regressive. The poor and the rich pay the same amount, which seems fair to those at the top of the scale, but not so much to those at the bottom.
Alternatively, Oklahoma's current income tax, it's progressive. The more you make, the more you pay based on whichever tax bracket your paycheck falls in.
That's not some wild socialist idea, it's just how income taxes work... at least, that's how it has worked in America since we started taxing income to pay for the Civil War. They did that in 1861 but ended it ten years later when the bills were paid.
They tried to enact it again in the 1890s, but it was struck down by the Supreme Court. Then in 1909, literally on a dare, an income tax bill was introduced as a constitutional amendment. Democrats saw it as a windfall for the federal government, so Republicans went along with it assuming there was no way 75% of the states would vote to ratify it.
Spoiler, they did.
Since the largest industry in America at the time was agriculture and exports, farmers almost unanimously voted to end the tariff system in favor of income taxes they could dodge on paper just as they do today.
That's not a swipe at farmers, that's just how those small, independent family businesses operate. Ever thought it was weird how dirt-poor farmers managed to afford those fancy $110,000 trucks every two or three years? Fuel, equipment, seed, etc... The average family farm spends millions each year to make "nothing" in the good years, and literally nothing in the bad. It's all about the deductions.
Then just like today, when the 16th Amendment went into effect in 1913, less than one percent of individuals paid a whopping 1% income tax.
US income tax was enacted by accident in a game of political chicken.
In the same spirit, the country is debating taxes vs tariffs right now, and depending on which side of the political spectrum you're on, you favor one or the other.
The long and short of it is, it doesn't matter which system the government opts for in the next few years. They'll get 100% of their money either way.
Net-zero gains for us.
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