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Oklahoma May Vote on Higher Sales Tax

1 min readBy: Joseph Bishop-Henchman

University of Oklahoma President David Boren, a former Governor and U.S. Senator, has launched a petition initiative to raise the state sales taxA tax is a mandatory payment or charge collected by local, state, and national governments from individuals or businesses to cover the costs of general government services, goods, and activities. by one percentage point, with the estimated $615 million dedicated to education (including $120 million for higher education and enough money for a $5,000 raise for each teacher in the state).

While Oklahoma’s state sales taxA sales tax is levied on retail sales of goods and services and, ideally, should apply to all final consumption with few exemptions. Many governments exempt goods like groceries; base broadening, such as including groceries, could keep rates lower. A sales tax should exempt business-to-business transactions which, when taxed, cause tax pyramiding. of 4.5 percent is relatively low among states, there are also local sales taxes that reach as high as an additional 6.5 percent. In Fort Gibson, consumers pay 11 percent; in the largest cities of Oklahoma City and Tulsa the rates are 8.375 percent and 8.517 percent, respectively, after adding up the state, county, and local sales taxes.

Adjusted for these rates and for population, the Oklahoma combined state and average local sales tax is 8.78 percent, the sixth highest in the country, behind Tennessee (9.46 percent), Arkansas (9.27 percent), Louisiana (9.01 percent), Alabama (8.93 percent), and Washington (8.90 percent). (It’s worth noting that Tennessee and Washington have high sales taxes but have no income tax.)

If enacted, the proposed one percent sales tax increase would bring the combined rate to 9.78 percent, leapfrogging all those states. Tulsa and Oklahoma City would join the cities with the highest sales taxes in America, with Chicago (10.25 percent) and Seattle (9.5 percent).

For more on state and local sales tax rates, see our midyear update.