1889 Institute: Oklahoma’s tax system can be improved

PRINCIPLES FOR SOUND TAX POLICY

Oklahoma’s tax system can be improved.

OKLAHOMA CITY, OK (July 15, 2021) – The 1889 Institute has published “The Why and How of Sound Tax Policy,” an exploration into the principles that should be followed in formulating tax policy. The study’s author, Luke Tucker, who is a PhD candidate in Philosophy at the University of Oklahoma, as well as 1889 Institute intern, looked across the ideological spectrum, and found an amazing amount of consensus among economists on this issue. He found that there are only four basic principles that should be followed in formulating tax policy:

- Neutrality – keep taxes from fundamentally changing economic calculations 

- Transparency – make it so people know what they are paying in taxes

- Simplicity – make it easy to comply with tax law

- Predictability – make it so it is easy to know what one will owe in taxes.

“Luke brought a fresh set of eyes to this issue, taking nothing for granted and assuming nothing in advance,” said Byron Schlomach, director of the 1889 Institute and himself a PhD economist. “Luke did an excellent job of looking deeper and explaining why these principles matter.”

Tucker also looked at the major taxes states impose, or have been recommended to impose, and evaluated them for each of the principles. These are: property tax, sales tax, personal income tax, corporate income tax, payroll tax, and value added tax. Only the property tax and the sales tax generally adhere to all four principles. He found that the corporate income tax failed to meet any of the four tax principles. The other taxes were a mixture.

“The study shows how Oklahoma’s tax system shows a distressing lack of regard for the principles that, as Luke points out, have been known, explained, and advocated at least since the days of Adam Smith, who wrote about them in 1776,” said Schlomach. “But, Oklahoma has company among nearly all of the states in this same disdain for sound tax principles,” he said.

About the 1889 Institute
The 1889 Institute is an Oklahoma think tank committed to independent, principled state policy fostering limited and responsible government, free enterprise and a robust civil society. The publication, “The Why and How of Sound Tax Policy” and other reports can be found on the nonprofit’s website at www.1889institute.org.