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

Oklahoma Leaders Should Demand Congress Fix the Supreme Court’s Mess, Not Rush to Strike a Deal with the Tribes

Five lawyers in Washington, D.C. have announced that many of us have been living on Indian reservations all this time, we just didn’t know it. In response, several of our elected state leaders have made noises indicating they are in the process of giving away the store in resulting negotiations with tribal leaders, apparently driven by defeatism and panic. They should get off this losing course, and instead demand that the one body that can fix this mess do so: Congress. First, how we got here. Jimcy McGirt, a revolting human being who was convicted of molesting, raping, and forcibly sodomizing his wife’s four-year-old granddaughter, has been justly rotting away in a cage for some 20 years as part of the 1,000-years-plus-life-in-prison sentence he was mercifully handed by an Oklahoma jury in 1997. McGirt came up with a clever legal theory, though. He claimed the State of Oklahoma never had jurisdiction to prosecute him because he is Indian and his crimes were committed on Creek reserv...
Read more

School Teachers Begging for Basics

What if a hospital’s administrators regularly told surgeons to make do without bandages, with dull scalpels, and little to no anesthetic while claiming tight finances? With all the money hospitals have , there would be questions about the administrators’ competence and possibly audits to look for malfeasance. Something like this needs to happen at Oklahoma City Public Schools. My wife is a teacher working in the Oklahoma City Public Schools (OKCPS) system. Last year, she came home telling me how there was no paper available for the notoriously few and regularly broken, undersupplied duplicating machines at her school. What’s more, there was no plan for the district to provide any. In the past, she was told, a parent had donated paper to that particular campus, but that parent had transferred his child to a private school. The school had surplus paper from previous years, but that was gone. There were no plans for the district to provide more. Now, I am well aware that educatio...
Read more

Good-Hearted, Wrong-Headed, and Funded by You, The Forgotten Man

“The type and formula of most schemes of philanthropy or humanitarianism is this: A and B put their heads together to decide what C shall be made to do for D. The radical vice of all these schemes, from a sociological point of view, is that C is not allowed a voice in the matter, and his position, character, and interests, as well as the ultimate effects on society through C's interests, are entirely overlooked. I call C the Forgotten Man.” -William Graham Sumner, quoted in The Forgotten Man , by Amity Shlaes. Perhaps the most awkward moment of my career came in the Summer of 2015. During the weekly Monday morning public meeting of the Board of County Commissioners for which I served as the legal advisor, I sat in my usual place at the end of the dais, next to a county commissioner I had butted heads with in the six months I had been on the job. None of that was new. What was new about this particular Monday meeting was that this same commissioner had been indicted the previo...
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