The Long-Standing Push to Eliminate State Personal Income Taxes in Oklahoma: Is There an Economic Growth Case to be Made?

Using Oklahoma as a case study, this paper evaluates the claims that lower state and local taxes on personal income increase economic growth. We first demonstrate the fallacy of using simple cross-state comparisons of high- and low-income tax states to evaluate the claims. This motivates a brief review of our recently published academic articles on state and local fiscal policy, which suggest that higher state personal income taxes either have no effect on economic growth or in some cases increase growth. Based on insights from our published papers, we then analyse the most recent tax cuts implemented by Oklahoma in 2022 and fail to find any evidence that the tax cuts increased income and tax revenues.