Skip to main content

Top-Ten in Low Taxes, But Oklahoma Still Has Much Room for Improvement


In a comparison of states’ total taxes as well as spending in certain broad categories that the 1889 Institute has just published (Oklahoma Government Revenues and Spending in Perspective – Update), some interesting facts arise. Using federal data, we compared states by looking at the percentage of personal income collected in state and local government revenues. We also looked at the percentage of personal income spent in six broad spending categories: higher education, public education, public welfare, hospitals, highways, and corrections.

The data shows that in 2017 Oklahoma’s state and local governments:

  • Extract 13.2 percent of Oklahomans’ personal income in taxes and fees, moving Oklahoma into the Top Ten lowest-taxing states, ahead of Texas. 
  • Spend 12.38 percent of personal income on the six featured spending areas (which include federal dollars), only a little below the national average of 12.7 percent. While 9th overall (least spent being first), Oklahoma is not that much better than the 25th-ranked state.
  • Spend a higher percentage of our income on higher education than 28 states.
  • Spend a higher percentage of income on public education than seven states, including Arizona, a leader in educational choice and progress, but making us a Top-Ten state in how well we hold schools’ feet to the fire for their spending. 
  • Spend a higher percentage of state personal income on public welfare than 24 states.

In addition, we calculate that if Oklahoma’s state and local governments increased efficiency by 10 percent, doable given the examples of other states, $2 billion would be available to enhance existing services, provide new ones, or be returned to taxpayers.

Unfortunately, compared to two years earlier, the personal income per capita (average per person) numbers, which are adjusted for cost of living, show Oklahoma having lost some ground relative to other states. In fact, the unadjusted personal income per capita actually fell from 2015 to 2017. After all, when the oil industry sneezes, Oklahoma catches cold. 

Nevertheless, Oklahoma is still in the top half of states when it comes to average personal income. A big reason for this is due to the adjustment for cost of living. Oklahoma has a low cost of living compared to the vast majority of states. We’re not just Top-Ten in that category; we’re Top-Five. It’s a distinction we should strive to keep.

It’s now arguable that Oklahoma is a low-tax state. But when it comes to specific spending categories, we’re all over the place. We can get a lot better overall if we become more like Florida or New York on higher education, Texas or Virginia on welfare, Georgia or Arizona on highways, and Massachusetts or Illinois on corrections.

We should strive to be the leanest and most efficient of all states in every category of spending at all levels of government. Doing so, we would extract as little as possible from citizens, leaving the greatest possible amount of resources in the private sector, where our free choices cause resources to migrate to their highest valued uses.

Oklahoma has not yet achieved the status of being a low-spending state, but it would be something to celebrate. Some seem to think that high spending and high performance are synonymous, but every value-adding organization on earth knows better. Unbridled spending shows a lack of accountability and an uncritical willingness to take from hard-working taxpayers. It’s a path toward weakness, not strength.

Byron Schlomach is Director of the 1889 Institute. He can be reached at bschlomach@1889institute.org. 

Popular posts from this blog

Religious Freedom and School Choice in the Nation's High Court

When the Supreme Court of the United States (SCOTUS) begins its term next week, one of the many important cases it will consider is that of Espinoza v. Montana Department of Revenue , which addresses Montana’s Tax Credit Scholarship program, and gives the high court an opportunity to decide whether Blaine Amendments (which generally prohibit any state money from going to a “sectarian” purpose) violate the establishment and free exercise clauses of the first amendment, as well as the and equal protection clause of the 14th Amendment. At the very least, the justices should rule on whether Blaine Amendments (like Section II-5 of the Oklahoma Constitution) can be used to exclude religious schools from school choice programs which insulate the state from direct subsidy of religious organizations through the “genuine, independent choice of private individuals.”   The question presented to the court is “Whether it violates the religion clauses or the equal protection clause of th...
Read more

A Simple Way to Improve Oklahoma’s Selection of Judges: Open Up the Process

The synod has finished its secret meetings and taken its vote behind closed doors. The public waits with bated breath (well, some of us) to get a glimpse at the new high priest who will don his formal vestments and take his seat at the commanding heights of doctrinal authority. Who will it be? Who will it be?! Then, as if delivered from the heavens, the names appear in a short announcement tucked in an obscure corner of the internet . WE HAVE CHOSEN. I am not describing the last papal conclave . I am describing Oklahoma’s unnecessarily mysterious process for selecting Supreme Court justices. All we are missing is the plume of white smoke. The nuances of the judicial selection methods employed by the 50 states are as varied as the cuisine. Some utilize elections, some gubernatorial appointments, some even have legislative appointments. We have commented on the relative strengths and weaknesses of these various methods, and will continue to do so, but some things are so f...
Read more

About Those Roads in Texas

A s Sooner fans head south for the OU-Texas game next week, they will encounter a phenomenon most of us are familiar with: as you cruise across the Red River suddenly the road gets noticeably smoother. The painted lane stripes get a little brighter and the roadside “Welcome to Texas” visitors’ center gleams in the sunlight, a modern and well-maintained reminder of how much more money the Lonestar State spends on public infrastructure than little old Oklahoma. Or does it? Why are the roads so much, well… better in Texas? Turns out, it isn’t the amount of money spent, at least not when compared to the overall size of the state’s economy and personal income of its inhabitants. Research conducted by 1889 Institute’s Byron Schlomach reveals that Oklahoma actually spends significantly more on roads than Texas as a percentage of both state GDP and personal income . And that was data from 2016, before Oklahoma’s tax and spending increases of recent years. The gap is likely gr...
Read more

Higher Home Prices, Brought to You by Oklahoma's Occupational Licensing Machine

Increasingly, people across the ideological spectrum recognize the costs of occupational licensing. Almost since its inception, the 1889 Institute has highlighted several of the least justifiable licensing regimes in Oklahoma. Each individual license may seem, if not harmless , then at least only slightly harmful on its own. But the effects add up. It is estimated that licensing costs $203 billion each year, and results in up to 2.85 million fewer jobs nationwide. One of the principle ways Americans build lasting wealth is through home ownership. So a license that interferes with this process is particularly galling.  The transaction costs of buying and selling a home in Oklahoma are too high. This is not a matter of opinion, like “the price of gas is too high” or “the luxury goods I would like to own cost too much.” It is an empirical fact. The way Oklahoma regulates the Abstracting and Title Insurance industries tangibly and demonstrably impacts the cost of buying...
Read more