A bill passed by the Legislature this year to reduce Oklahoma's personal income tax rate is constitutional, the state Supreme Court ruled Tuesday in a unanimous decision.
In a 7-0 decision with two justices not voting, the court rejected an Oklahoma City attorney's argument that the income tax cut was a revenue-raising bill that should have originated in the Oklahoma House and received three-fourths approval.
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The court said the supermajority requirements approved by voters in 1992 with State Question 640 do not apply to a bill to reduce income tax rates.
"To hold otherwise would defeat the evident and object and purpose of the 1992 amendment," the court wrote.
Passed by the Republican-controlled Legislature earlier this year and signed into law by GOP Gov. Mary Fallin, the bill reduces Oklahoma's top personal income tax rate from 5.25 percent to 5 percent in 2016 if certain revenue conditions are met, with a further cut to 4.85 percent possible two years later.
Fallin praised the court's ruling and said it's a "victory for taxpayers."
"I appreciate the court's wisdom on this issue as well as its willingness to act quickly," Fallin said in a statement. "Putting to rest any legal uncertainty surrounding the tax cuts makes it easier for lawmakers and myself to craft a budget in the coming legislative session."
The lawsuit was filed by Oklahoma City attorney Jerry Fent, who has successfully challenged other legislation in the past. He filed a lawsuit last year that led to the Supreme Court ruling that a 2013 income tax cut was unconstitutional.
Fent said Tuesday he wasn't disappointed that the court ruled against him.
"I'm happy that there is now a decision on that," Fent said. "Hopefully we'll get some legislators in there to reduce our taxes, or better yet, reduce some of these subsidies that are given out the back door."
A cut in the state's income tax has long been a priority for Fallin and other GOP lawmakers who argue that lowering the rate will make Oklahoma more attractive to business and industry and spur economic growth. Critics, including many Democrats, maintain that a reduced tax rate will starve the state of much-needed revenue for core government functions such as roads, schools and public safety.
Senate Bill 1246: http://bit.ly/1ebSQmz
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