Sunday, September 30, 2007

Tax Cuts are O-K-L-A-H-O-M-A

My brother, Mark Shelley, of Oklahoma City told me about a tax cut proposal in the Oklahoma state Senate and I thought it was a great idea. The bill will eliminate state income tax on overtime pay. A write up of the consideration is available at the Red Dirt Political Report.

“The proposal — Senate Bill 1132 — would exempt most overtime pay from state income taxes required by the federal Fair Labor Standards Act (FLSA). “ To show that I’m not just a partisan, State Senator Kenneth Corn, D-Poteau, and Rep. Bud Smithson, D-Salisaw sponsored the bill.

Who will it help?

Generally, those who are overtime eligible do not have high income jobs. Anything from a McDonalds fry cook to a “turn around” technician at an oil refinery. This tax cut would help the working middle class and working poor.

Why is it good?

Sometimes reforms designed to help the poor are just giveaways to anyone with a low income. This bill isn’t like that. This bill rewards WORKING people, and leaves out anyone who is living on the public dole. It rewards work, not just for having a pulse and a low income.

The other aspects of the bill are attractive to the economist in me. First, it will give an incentive for anyone who works an hourly job to work harder and more hours because the pay rate will be higher. While many low income working people already pay very little, if any, income tax, they still have to wait until tax return time to get their money back. Decreasing the withholding on overtime on their check will let them see more immediate returns for their work, giving yet another incentive for harder work.

The other reason why this is a good idea is political. In the press release from the Oklahoma Senate the two Democratic Senators are joined with AFL-CIO President Jim Curry. If the Unions are in support of a tax cut than how could some of the big government supporters on the left be against it. This is a great issue for small government supporters to push for both political and economic reasons.

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