Oklahoma House of Representatives
Office of the Speaker
March 11, 2004
FOR IMMEDIATE RELEASE
Contact: Mike Fina
Media Assistant to the Speaker
Oklahoma City: (405) 962-7618 or (800) 522-8502

Common Sense

By House Speaker Larry E. Adair
There has been much discussion this session over the reduction or elimination of the state's capital gains tax. This tax is levied on profits gained by the sale of investment property. The range of property includes stocks, real property, fine art, etc., virtually anything that has a sellable value.

Governor Henry proposed to eliminate the capital gains tax on the sale of Oklahoma-based property. To be eligible the investor would have to hold onto the property for five years before liquidation. House Republicans and the Lieutenant Governor would like us to link capital gains tax elimination to the tobacco tax increase proposal. However, the tobacco proposal passed the House without the capital gains reduction language included.

It is evident that almost everyone is passionate about this issue and I am confident Oklahoma will see significant changes to the capital gains tax by the end of session. Currently we have two bills, authored by Democrat members, that have been approved by the House and will now be considered by the state Senate.

House Bill 2379 by Rep. Larry Rice proposes to cut capital gains taxes in half, and would cost the state treasury $51 million.

House Bill 2421 by Rep. Clay Pope would cut state income and capital gains taxes and repeal an onerous sales/use tax mandate. The measure also would establish the top marginal rate for Method 1 income-tax filers at 6.5 percent, and would eliminate the "trigger" mechanism that automatically increases state income tax rates.

Both are viable options and good for the state and neither measure is tied to the tobacco tax proposal. Unfortunately budget constraints and other financial obligations make the $102 million price tag to eliminate the tax out of reach this year. Lawmakers will evaluate the merits of both measures and determine what will fit in the budget.

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