Some public policy groups warn, however, that the income tax reform proposals making their way through the state Capitol could mean an increase in the tax burden for working parents.
Four bills to reduce the income tax this year — and possibly phase it out over the next decade — are still alive in the Legislature. Each measure strives to be revenue-neutral by offsetting tax rate reductions with the elimination of credits, exemptions and deductions.
“The goal is to reduce the income tax on working Oklahomans,” said House Speaker Kris Steele. “That being said, we are going to use a scalpel, not an ax, as we evaluate all the various incentives or deductions or credits that are currently on the books.”
While it’s too early to know what bill will finally emerge, one credit that gets eliminated in each of the four proposals is the child care tax credit.
“There are certain credits and exemptions that we believe are on the chopping block that could potentially hurt Oklahoma families — working families especially,” said
Amber England, policy director for the Oklahoma Institute for Child Advocacy. “One of those is the child care tax credit.”
Eligible to Oklahomans with an income of less than $100,000, the credit is used by working parents to offset the costs of child care.
According to the Oklahoma Tax Commission, more than 383,000 Oklahoma tax filers used it last year to get back more than $29.1 million.
Sheri Guyse is a single mother of two children; she and her ex-husband share child care costs. With the kids in school, child care means after-school programs and summer care, at an annual cost of $3,500.
“If the credit goes away, I will either have less of a refund or I’ll owe taxes,” Guyse said. “It will never mean I don’t put my kids in child care. I’m a single mom and I just have to figure it out. But that might mean we don’t get a vacation, or if we take a vacation, instead of going to the mountains, we go to Tulsa … or there are after-school activities that have to get cut. It would just decrease the quality of life for my family.”
England said many of the tax proposals would wipe out deductions and credits this year, while phasing down the tax rate over several years. That could cause some working families to see an initial increase in their overall tax burden, she said.
Steele conceded that’s a valid concern, but said legislators are working to ensure that doesn’t happen.
“The goal is not to hurt or harm anyone, but rather to try to reduce the overall tax burden on all working Oklahomans,” said the Shawnee Republican. “But it’s obviously a very complicated process and a very complicated issue. I believe we need to take a very measured, methodical, responsible approach, and I believe we will.”
That is little consolation for Guyse. “I trust my Legislature as far as I can throw them collectively,” she said.
Guyse worried that industries and interest groups might be able to preserve their tax credits, while working families lose out.
“It’s frustrating that this credit could be taken away because there’s not a paid lobbyist with their eye on this credit on behalf of people who benefit from it,” she said.
Steele said a final plan should be released before the end of April.
“I would also just caution everyone not to rush to judgment until we present a final plan,” he said. “We’ve made it very clear that all four of the proposals that are making their way through the process — each and every one of them is a work in progress.”