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

Muddy, Shallow Thinking Versus Clarity in Education Reform

Monopolies are the best! If we are to gain maximum efficiency and create the greatest value for people, monopoly is the way to go. Competition creates administrative inefficiency since instead of one set of managers, there are as many as there are companies, and all of them cost money. Competitive companies make products that do the same basic things, but waste resources by making products with different features. Standardized products would save money. Were research and development under one roof, instead of many competitive ones, researchers could coordinate more closely, saving money and ultimately being even more innovative. Monopolies would therefore benefit everyone. Everything in the first paragraph is, of course, balderdash . Monopolies, especially those created by government, stifle innovation, develop bloated management, produce too little at low quality, and charge too much. Why? Because they can. They’re monopolists. Without competition and with nearly guaranteed ...
Read more

No License, Sherlock: Licensing for Private Investigators

What does a private investigator do? Surely, we’re all familiar with various movies and shows featuring the exciting adventures of Sherlock Holmes or Magnum PI. However, reality is often disappointing, and the fact is private investigation is usually dull and relatively safe. Private investigators are tasked with conducting surveillance and fact-finding missions for their clients, but they gain no special powers to do so.  My recent paper deals with the licensing of private investigators. Oklahoma’s private investigator licenses are governed by the Council of Law Enforcement Education and Training (CLEET), which follows the advice of a committee made up of people who run private investigative agencies. Improved competition is not likely to be in the best interest of these agencies, so it is questionable whether they should be in a gate-keeping position they could easily turn to their advantage. Private Investigators must undergo a series of trainings and pas...
Read more

Senator Sanders Misses the Mark On Oklahoma Education

Minimum Wage for Teachers Senator Sanders recently wrote an op-ed for the Oklahoman. Among other radical ideas, he proposes a federal minimum wage for teachers of $60,000. In a free market, a minimum wage hurts those who earn less than the minimum wage. If they can’t produce more value than the minimum wage, they will be unemployable. For teachers, who operate in a regulated market, it will still be more difficult for inexperienced teachers to find a job. Incentives to pursue further training and education, or to take on additional roles like advising clubs or coaching sports will be diminished. Or perhaps young teachers will be required to take on one or more of these extracurricular activities to justify their higher cost.   Lost in the promise of a minimum wage is the idea that the best teachers should be paid the most. Instead, most public school teachers in Oklahoma are paid in lockstep - meaning that an outstanding teacher makes the same as a mediocre teacher wit...
Read more

Oklahoma Is OK, but Seriously, That’s Not OK

The Americans at the table, negotiating a business deal, ask one of their number, “You can speak Dutch?” He replies, “I’m OK.” With his fellow Americans looking doubtful, he proceeds to mistranslate what they want him to say to their Dutch counterparts. The “OK” translator tells the Dutch that the Americans really need a hug, when he was supposed to tell them they really need the deal. With that, the AT&T commercial ends as one of the Dutch negotiators gives an American a hug with the announcer saying, “When just OK is not OK.” There are several of these commercials, each with a different scenario, in which, indeed, just OK is not OK. And every time I see one of these commercials I think of the license plates that were once so common – “ Oklahoma is OK. ” As someone who works to develop policy suggestions intended to make Oklahoma better, and hopefully, the best that Oklahoma can be, it often seems that slogan – Oklahoma is OK – gets in the way. The fact is, in most r...
Read more