If the comments were directed at anyone, they were directed at representative Randy Terrill, the Republican chairman of the House Revenue and Taxation Committee. Terrill thinks the state income tax is still too high, although currently there are no proposals to lower it further after the already-passed legislation takes effect in 2008, but there are proposals that would repeal state taxes on overtime pay and groceries. Last Thursday, state representatives heard from advocates on both sides of the issue; David Blatt, a public policy analyst from Tulsa, argued against further income tax cuts, and Phil Kerpen, national policy director for the conservative tax-slashing organization Americans for Prosperity, argued for further income tax cuts. It was Kerpen who made an absolutely terrible analogy between cigarette taxes and income tax.
States tax tobacco heavily because they want to discourage its use, and the income tax rate can work in the same way.
"It makes perfect sense: If you tax people more, then they have less reward for working, saving and investing, so they'll do less of those things,” Kerpen said.
I don't understand the analogy at all. I don't think the tax rate factors into anyone's decision on whether or not to work. I dare Phil Kerpen to show me the gentleman who chose to wait until the state lowered their income tax rate by half a percent in order to take that job at Starbucks, or the lady who quit her job at Wal-Mart when the state decided to impose a tax hike to fund roads and bridges. People are going to have to work to earn a living, whether the state income tax is at 5% or 15%. People, however, don't have to smoke.
One final note: according to this chart on MSN, Oklahoma has the 40th highest state taxes in the nation, on average. So it's not like our taxes are outrageous or anything. Plus our oil-rich state economy has been doing really well recently due to high energy prices.