A state commission has voted to continue a tax break that cost the state $465 million in five years, can’t be shown to be helping the Oklahoma economy and overwhelmingly benefits the rich.
The Oklahoma Incentive Evaluation Commission was created with the responsibility for making sure the state’s tax incentives are working for the state.
But when the commission met recently, it wasn’t willing to approve its own consultant’s recommendation to do something about the state capital gains tax exemption.
The exemption — created by voters in 2004 as part of an effort to raise the state tobacco tax — allows profits from the sale of Oklahoma-based property and stocks to be fully deductible.
To qualify, the seller must have owned the property for at least five years or the stock for at least three years, but there is no requirement that the profits be reinvested in Oklahoma.
From 2010 to 2014, the incentive created an estimated $9 million in additional tax revenue while costing the state $474 million, according to a study by PFM, a consultant to the commission.
The study found that 86 percent of the tax breaks went to residents making at least $200,000 a year.
The consultant recommended asking the Legislature to repeal the incentive or require that proceeds be re-invested in Oklahoma. The commission rejected any action on a 3-1 vote.
“We really have no evidence that it’s leading to more spending in Oklahoma,” said Cynthia Rogers, the only commissioner to vote against the tax break.
Other commissioners argued the incentive promoted investment in Oklahoma companies and spurred economic growth.
Unfortunately, there’s not any data to back that idea up.
The Legislature sold the commission to the people of Oklahoma as a chance to review tax incentives to make sure they are helping Oklahoma, but when it came down to it, the panel wasn’t willing to listen to its own consultant or act in the state’s best interest.