Oklahoma has the Fourth Lowest Tax Burden in the Nation for 2011

Oct 16, 2013

In Fiscal Year (FY) 2011, Oklahoma collected $12 billion in state and local taxes. While this is an impressive sum of money, it tells us little about whether or not the average Oklahoma taxpayer can afford this level of taxation.

As shown in the charts below, Oklahoma’s state and local tax burden (tax collections divided by personal income) was the 4th lowest in the nation for FY 2011 at 8.5 percent—or 18.7 percent below the national average of 10.5 percent.

More impressively, Oklahoma is one of a handful of states where the tax burden has declined over time. Oklahoma’s tax burden fell by 4 percent to 8.5 percent in FY 2011 from 8.9 percent in FY 1950. However, this understates the degree of decline because Oklahoma’s tax burden peaked at 10.4 percent in FY 1997. Over the next fourteen years, Oklahoma’s tax burden declined by 18.2 percent.

There are two major reasons for Oklahoma’s low tax burden. First, Oklahoma’s state and local property tax burden is only 1.57 percent—the 2nd lowest in the country. However, the property tax burden was not always this low as it was as high as 3.1 percent in FY 1964. As such, the property tax burden has been cut in half.

Second, Oklahoma’s individual income tax burden has been on a downward trajectory since peaking at 2.7 percent in FY 1999. The primary reason for this decline has been a series of legislative tax changes that have cut marginal tax rates. According to a recent article from the Oklahoma Council of Public Affairs:

"From 2004 through 2009, Oklahoma’s personal income tax—the amount the state penalizes citizens and job creators for the right to earn a living—was lowered more than 20 percent. Over this period of time, the top marginal rate dropped, in a series of four reductions, from 7.00 percent to 5.50 percent."

"With each drop in the rate, many individuals and organizations in favor of higher government spending worked against the income tax cuts. They claimed income tax cuts would result in less revenue for state government programs. Even the Oklahoma Tax Commission estimated, with each new income tax cut, that the state would see a loss in revenue."

"What actually transpired was that Oklahoma saw an increase, both in economic activity and tax revenues, with each of the income tax cuts implemented between 2004 and 2009."

However, mitigating the good news of lower property and individual income taxes has been a growing sales tax burden. Between FY 1950 and FY 2011, Oklahoma’s sales tax burden has grown by a whopping 88 percent to 2.8 percent from 1.5 percent and is the 15th highest in the country.

The reason for Oklahoma’s high sales tax burden is because in addition to a state sales tax there are also local option sales taxes leading to high combined state and local statutory tax rates. In fact, the Tax Foundation found that the combined state and local tax rate is 8.72 percent which is the 5th highest in the country.

Of course, the local option sales tax is likely responsible for keeping the property tax burden so low. As such, the dynamic between the property tax and the local option sales tax is more akin to a slow-moving shifting of the tax burden from one tax to another--though  imperfectly as the increase in the sales tax burden exceeds the decrease in the property tax burden.

Overall, Oklahoma has significantly boosted its economic competitiveness by not only reducing the tax burden over the last decade, but also by recently enacting right-to-work. As a result, Oklahoma has experienced a recent surge of in-migration as taxpayers “vote with their feet” in favor of these policy changes. Put simply, taxes matter!

Click here to view tax burden data.



Category: Tax Burdens

J. Scott Moody

Scott has nearly 20 years of experience as a public policy economist. He is the author, co-author and editor of over 180 studies and books. His professional experience also includes positions at the American Conservative Union Foundation, Granite Institute, Federalism In Action, Maine Heritage Policy Center, Tax Foundation, and Heritage Foundation.

Add Pingback
blog comments powered by Disqus

Stay Up-To-Date on Your State's Key Policy Data - Economics, Politics, Demographics - by Joining Our Mailing List Today!

Check Out Our Unique Apps:

U.S. Capitol.jpg

Government Workforce

Tax Squeeze.jpg

Tax Burden

Strings Attached to Federal Dollars.jpg

Federal Tax and Spend

Hundred Dollar Bill.jpg

Cost of Living (COLI)



Measuring a Dollar.jpg

Federal Tax & COLI


Federal Pension

United States Office of Personnel Management Seal.jpg

Federal Payroll

Check out more

Stories from our

Media Partner:

Check Out All Posts For Your State:

Alabama.jpg  Alabama

Alaska.jpg  Alaska   

Arizona.jpg   Arizona 

Arkansas.jpg  Arkansas

California.jpg  California

Colorado.jpg  Colorado

Connecticut.jpg  Connecticut

 Delaware.jpg  Delaware

Florida.jpg  Florida

 Georgia.jpg  Georgia

Hawaii.jpg  Hawaii

  Idaho.jpg  Idaho

   Illinois.jpg  Illinois

   Indiana.jpg  Indiana

  Iowa.jpg  Iowa

  Kansas.jpg  Kansas

  Kentucky.jpg  Kentucky

   Louisiana.jpg  Louisiana

   Maine.jpg  Maine

  Maryland.jpg  Maryland

Massachusetts.jpg  Massachusetts

Michigan.jpg  Michigan

Minnesota.jpg  Minnesota

  Mississippi.jpg  Mississippi

Missouri.jpg  Missouri

Montana.jpg  Montana

Nebraska.jpg  Nebraska

Nevada.jpg  Nevada

New Hampshire.jpg  New Hampshire

New Jersey.jpg  New Jersey

New Mexico.jpg  New Mexico

New York.jpg  New York

North Carolina.jpg  North Carolina

North Dakota.jpg  North Dakota

Ohio.jpg  Ohio

Oklahoma.jpg  Oklahoma

Oregon.jpg  Oregon

Pennsylvania.jpg  Pennsylvania

Rhode Island.jpg  Rhode Island

South Carolina.jpg  South Carolina

South Dakota.jpg  South Dakota

Tennessee.jpg  Tennessee

Texas.jpg  Texas

Utah.jpg  Utah

Vermont.jpg  Vermont

Virginia.jpg  Virginia

Washington.jpg  Washington

West Virginia.jpg  West Virginia

Wisconsin.jpg  Wisconsin

Wyoming.jpg  Wyoming