For example, the Department of Commerce reports that lack of sites with utility infrastructure is the single greatest factor in not securing a prospective business. While a state’s tax burden is certainly a consideration in a company’s decision to relocate or expand, LOFT learned from stakeholder engagements that workforce and infrastructure are currently the greatest impediments to Oklahoma’s business recruitment efforts. Today, the top individual income tax rate is 4.75 percent and the corporate income tax is 4 percent. In 1992, the tax rate for individual income tax was 7 percent and corporate income tax was 6 percent. Over the past 30 years, Oklahoma has significantly reduced its tax rates. This evaluation resulted in three key findings:įinding 1: Oklahoma Has Worked to Make the Tax Burden Competitive, Now Workforce and Infrastructure Are More Significant Concerns for Businesses. Last, LOFT examined options to provide tax certainty to businesses and revenue stability to the State. Additionally, LOFT sought to identify policies that either deter or encourage business growth. With this evaluation, the Legislative Office of Fiscal Transparency examined Oklahoma’s taxes on businesses and the available methods for adjusting the State’s tax structure. Source: United States Bureau of Economic Analysis (BEA) Total taxes directly generated by the oil and gas industry comprised, on average, 7.24 percent of total revenue, though this metric does not reflect the full economic impact of an industry. In the last ten years, the share of Oklahoma’s GDP made up by oil and gas rose from 13.6 to 19.35 percent. Oil and gas remains Oklahoma’s largest industry. Oklahoma’s top five industries (by GDP) have not changed over the last ten years, though the mix of companies and subsectors within those industries has evolved. When taken as a portion of all statewide revenues, including fines, fees, and other levies, business taxes average just over 11 percent of all state revenue in the past ten years. In 2022, approximately 19 percent of Oklahoma’s total tax revenue ($2.4 billion) came from four taxes levied solely on businesses: Gross Production, Corporate Income, Franchise, and withholdings for pass-through entities. Maps do not reflect that Oklahoma’s corporate income tax rate went from six to four percent in 2022. Note: Texas does not have a corporate income tax, instead relying on higher franchise and ad valorem taxes. Source: Left Map - Ernst & Young, with the Council on State Taxation and State Tax Research Institute Right Map – Tax Foundation. As Oklahoma’s tax structure differs from other states in the region, tax policy changes require different considerations.During a time of general decline in manufacturing, Oklahoma’s aeronautics industry experienced 188 percent growth in GDP (2011-2021), with aerospace products and parts manufacturing recording the 7 th largest increase in total employment from 2008-2022.
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