STATE OF OKLAHOMA

1st Session of the 54th Legislature (2013)

HOUSE BILL 1101	By:	Sears

AS INTRODUCED

An Act relating to revenue and taxation; amending 68 O.S. 2011, Section 2355, which relates to income tax provisions; modifying certain tax rates; providing for decrease in top marginal income tax rate; imposing duties upon State Board of Equalization; requiring computation of certain revenue amounts; providing for reduction of top marginal income tax rate based upon certain computations; providing for decrease in top marginal income tax rate under certain circumstances; repealing 68 O.S. 2011, Section 2355.1A, which relates to certain revenue computations by the State Board of Equalization; providing for codification; and providing an effective date.

BE IT ENACTED BY THE PEOPLE OF THE STATE OF OKLAHOMA:
SECTION 1.     AMENDATORY     68 O.S. 2011, Section 2355, is amended to read as follows:
Section 2355.  A.  Individuals.  For all taxable years beginning after December 31, 1998, and before January 1, 2006, a tax is hereby imposed upon the Oklahoma taxable income of every resident or nonresident individual, which tax shall be computed at the option of the taxpayer under one of the two following methods:
1.  METHOD 1.
a.	Single individuals and married individuals filing separately not deducting federal income tax:
(1)	1/2% tax on first $1,000.00 or part thereof,
(2)	1% tax on next $1,500.00 or part thereof,
(3)	2% tax on next $1,250.00 or part thereof,
(4)	3% tax on next $1,150.00 or part thereof,
(5)	4% tax on next $1,300.00 or part thereof,
(6)	5% tax on next $1,500.00 or part thereof,
(7)	6% tax on next $2,300.00 or part thereof, and
(8)	(a)	for taxable years beginning after December 31, 1998, and before January 1, 2002, 6.75% tax on the remainder,
(b)	for taxable years beginning on or after January 1, 2002, and before January 1, 2004, 7% tax on the remainder, and
(c)	for taxable years beginning on or after January 1, 2004, 6.65% tax on the remainder.
b.	Married individuals filing jointly and surviving spouse to the extent and in the manner that a surviving spouse is permitted to file a joint return under the provisions of the Internal Revenue Code and heads of households as defined in the Internal Revenue Code not deducting federal income tax:
(1)	1/2% tax on first $2,000.00 or part thereof,
(2)	1% tax on next $3,000.00 or part thereof,
(3)	2% tax on next $2,500.00 or part thereof,
(4)	3% tax on next $2,300.00 or part thereof,
(5)	4% tax on next $2,400.00 or part thereof,
(6)	5% tax on next $2,800.00 or part thereof,
(7)	6% tax on next $6,000.00 or part thereof, and
(8)	(a)	for taxable years beginning after December 31, 1998, and before January 1, 2002, 6.75% tax on the remainder,
(b)	for taxable years beginning on or after January 1, 2002, and before January 1, 2004, 7% tax on the remainder, and
(c)	for taxable years beginning on or after January 1, 2004, 6.65% tax on the remainder.
2.  METHOD 2.
a.	Single individuals and married individuals filing separately deducting federal income tax:
(1)	1/2% tax on first $1,000.00 or part thereof,
(2)	1% tax on next $1,500.00 or part thereof,
(3)	2% tax on next $1,250.00 or part thereof,
(4)	3% tax on next $1,150.00 or part thereof,
(5)	4% tax on next $1,200.00 or part thereof,
(6)	5% tax on next $1,400.00 or part thereof,
(7)	6% tax on next $1,500.00 or part thereof,
(8)	7% tax on next $1,500.00 or part thereof,
(9)	8% tax on next $2,000.00 or part thereof,
(10)	9% tax on next $3,500.00 or part thereof, and
(11)	10% tax on the remainder.
b.	Married individuals filing jointly and surviving spouse to the extent and in the manner that a surviving spouse is permitted to file a joint return under the provisions of the Internal Revenue Code and heads of households as defined in the Internal Revenue Code deducting federal income tax:
(1)	1/2% tax on the first $2,000.00 or part thereof,
(2)	1% tax on the next $3,000.00 or part thereof,
(3)	2% tax on the next $2,500.00 or part thereof,
(4)	3% tax on the next $1,400.00 or part thereof,
(5)	4% tax on the next $1,500.00 or part thereof,
(6)	5% tax on the next $1,600.00 or part thereof,
(7)	6% tax on the next $1,250.00 or part thereof,
(8)	7% tax on the next $1,750.00 or part thereof,
(9)	8% tax on the next $3,000.00 or part thereof,
(10)	9% tax on the next $6,000.00 or part thereof, and
(11)	10% tax on the remainder.
B.  1.  Individuals.  For all taxable years beginning on or after January 1, 2008 2014, a tax is hereby imposed upon the Oklahoma taxable income of every resident or nonresident individual, which tax shall be computed as follows:
1.
a.	Single individuals and married individuals filing separately:
(a) (1)	1/2% tax on first $1,000.00 or part thereof,
(b) (2)	1% tax on next $1,500.00 or part thereof,
(c) (3)	2% tax on next $1,250.00 or part thereof,
(d) (4)	3% tax on next $1,150.00 or part thereof,
(e) (5)	4% tax on next $2,300.00 or part thereof unless a reduction in the top marginal income tax rate is authorized pursuant to division (8) of this subparagraph in which case the rate of tax on the next $2,300.00 or part thereof shall not be imposed,
(f) (6)	5% tax on next $1,500.00 or part thereof, unless a reduction in the top marginal income tax rate is authorized pursuant to division (8) of this subparagraph in which case the rate of tax on the next $1,500.00 or part thereof shall not be imposed,
(g)	5.50% tax on the remainder for the 2008 tax year and any subsequent tax year unless the rate prescribed by subparagraph (h) of this paragraph is in effect, and
(h) (7)	5.25% tax on the remainder for the 2009 and subsequent 2014 tax years year and subsequent tax years unless reduced pursuant to division (8) of this subparagraph.  The decrease in the top marginal individual income tax rate otherwise authorized by this subparagraph shall be contingent upon the determination required to be made by the State Board of Equalization pursuant to Section 2355.1A of this title, and
(8)	the top marginal rate of income tax prescribed by division (7) of this subparagraph may be reduced in increments of twenty-five hundredths (0.25) based on the determinations of the State Board of Equalization pursuant to Section 2 of this act to:
(a)	5.00%, 
(b)	4.75%,
(c)	4.5%,
(d)	4.25%,
(e)	4.00%,
(f)	3.75%,
(g)	3.5%, and
(h)	3.25%.
2.
b.	Married individuals filing jointly and surviving spouse to the extent and in the manner that a surviving spouse is permitted to file a joint return under the provisions of the Internal Revenue Code and heads of households as defined in the Internal Revenue Code:
(a) (1)	1/2% tax on first $2,000.00 or part thereof,
(b) (2)	1% tax on next $3,000.00 or part thereof,
(c) (3)	2% tax on next $2,500.00 or part thereof,
(d) (4)	3% tax on next $2,300.00 or part thereof,
(e) (5)	4% tax on next $2,400.00 or part thereof unless a reduction in the top marginal income tax rate is authorized pursuant to division (8) of this subparagraph in which case the rate of tax on the next $2,400.00 or part thereof shall not be imposed,
(f) (6)	5% tax on next $2,800.00 or part thereof, unless a reduction in the top marginal income tax rate is authorized pursuant to division (8) of this subparagraph in which case the rate of tax on the next $2,800.00 or part thereof shall not be imposed,
(g)	5.50% tax on the remainder for the 2008 tax year and any subsequent tax year unless the rate prescribed by subparagraph (h) of this paragraph is in effect, and
(h) (7)	5.25% tax on the remainder for the 2009 and subsequent 2014 tax years year and subsequent tax years unless reduced pursuant to division (8) of this subparagraph.  The decrease in the top marginal individual income tax rate otherwise authorized by this subparagraph shall be contingent upon the determination required to be made by the State Board of Equalization pursuant to Section 2355.1A of this title, and
(8)	the top marginal rate of income tax prescribed by division (7) of this subparagraph may be reduced in increments of twenty-five hundredths (0.25) based on the determinations of the State Board of Equalization pursuant to Section 2 of this act to:
(a)	5.00%, 
(b)	4.75%,
(c)	4.5%,
(d)	4.25%,
(e)	4.00%,
(f)	3.75%,
(g)	3.5%, and
(h)	3.25%.
2.  No deduction for federal income taxes paid shall be allowed to any taxpayer to arrive at taxable income.
C.  Nonresident aliens.  In lieu of the rates set forth in subsection A above, there shall be imposed on nonresident aliens, as defined in the Internal Revenue Code, a tax of eight percent (8%) instead of thirty percent (30%) as used in the Internal Revenue Code, with respect to the Oklahoma taxable income of such nonresident aliens as determined under the provision of the Oklahoma Income Tax Act.
Every payer of amounts covered by this subsection shall deduct and withhold from such amounts paid each payee an amount equal to eight percent (8%) thereof.  Every payer required to deduct and withhold taxes under this subsection shall for each quarterly period on or before the last day of the month following the close of each such quarterly period, pay over the amount so withheld as taxes to the Tax Commission, and shall file a return with each such payment.  Such return shall be in such form as the Tax Commission shall prescribe.  Every payer required under this subsection to deduct and withhold a tax from a payee shall, as to the total amounts paid to each payee during the calendar year, furnish to such payee, on or before January 31, of the succeeding year, a written statement showing the name of the payer, the name of the payee and the payee's social security account number, if any, the total amount paid subject to taxation, and the total amount deducted and withheld as tax and such other information as the Tax Commission may require.  Any payer who fails to withhold or pay to the Tax Commission any sums herein required to be withheld or paid shall be personally and individually liable therefor to the State of Oklahoma.
D.  Corporations.  For all taxable years beginning after December 31, 1989, a tax is hereby imposed upon the Oklahoma taxable income of every corporation doing business within this state or deriving income from sources within this state in an amount equal to six percent (6%) thereof.
There shall be no additional Oklahoma income tax imposed on accumulated taxable income or on undistributed personal holding company income as those terms are defined in the Internal Revenue Code.
E.  Certain foreign corporations.  In lieu of the tax imposed in the first paragraph of subsection C of this section, for all taxable years beginning after December 31, 1989, there shall be imposed on foreign corporations, as defined in the Internal Revenue Code, a tax of six percent (6%) instead of thirty percent (30%) as used in the Internal Revenue Code, where such income is received from sources within Oklahoma, in accordance with the provisions of the Internal Revenue Code and the Oklahoma Income Tax Act.
Every payer of amounts covered by this subsection shall deduct and withhold from such amounts paid each payee an amount equal to six percent (6%) thereof.  Every payer required to deduct and withhold taxes under this subsection shall for each quarterly period on or before the last day of the month following the close of each such quarterly period, pay over the amount so withheld as taxes to the Tax Commission, and shall file a return with each such payment.  Such return shall be in such form as the Tax Commission shall prescribe.  Every payer required under this subsection to deduct and withhold a tax from a payee shall, as to the total amounts paid to each payee during the calendar year, furnish to such payee, on or before January 31, of the succeeding year, a written statement showing the name of the payer, the name of the payee and the payee's social security account number, if any, the total amounts paid subject to taxation, the total amount deducted and withheld as tax and such other information as the Tax Commission may require.  Any payer who fails to withhold or pay to the Tax Commission any sums herein required to be withheld or paid shall be personally and individually liable therefor to the State of Oklahoma.
F.  Fiduciaries.  A tax is hereby imposed upon the Oklahoma taxable income of every trust and estate at the same rates as are provided in subsection B of this section for single individuals.  Fiduciaries are not allowed a deduction for any federal income tax paid.
G.  Tax rate tables.  For all taxable years beginning after December 31, 1991, in lieu of the tax imposed by subsection A or B of this section, as applicable there is hereby imposed for each taxable year on the taxable income of every individual, whose taxable income for such taxable year does not exceed the ceiling amount, a tax determined under tables, applicable to such taxable year which shall be prescribed by the Tax Commission and which shall be in such form as it determines appropriate.  In the table so prescribed, the amounts of the tax shall be computed on the basis of the rates prescribed by subsections A and B of this section.  For purposes of this subsection, the term "ceiling amount" means, with respect to any taxpayer, the amount determined by the Tax Commission for the tax rate category in which such taxpayer falls.
SECTION 2.     NEW LAW     A new section of law to be codified in the Oklahoma Statutes as Section 2355.1E of Title 68, unless there is created a duplication in numbering, reads as follows:
A.  The provisions of this section shall be applicable with respect to the implementation of decreases in the top marginal rate of individual income tax authorized pursuant to the provisions of division (8) of subparagraphs a and b of paragraph 1 of subsection B of Section 2355 of Title 68 of the Oklahoma Statutes.  Except as otherwise provided by subsection F of this section, the State Board of Equalization shall make a determination each year pursuant to subsection B, subsection C and subsection D of this section until such income tax rate equals three and twenty-five hundredths percent (3.25%).
B.  None of the decreases to the top marginal income tax rate otherwise authorized by this section may occur unless the State Board of Equalization makes a finding at the December 2014 meeting and at each subsequent December meeting, as applicable, that the total revenue collections from all sources certified by the State Board of Equalization for the fiscal year ending on June 30 immediately preceding the December meeting are equal to or greater than the total revenue collections from all sources certified by the State Board of Equalization for the fiscal year ending June 30, 2013.
C.  In addition to any other duties prescribed by law, at the meeting required by paragraph 3 of Section 23 of Article X of the Oklahoma Constitution to be held in December 2014, the State Board of Equalization shall, in addition to the determination required by subsection B of this section:
1.  Determine the combined amount of revenue collected for the fiscal year ending on June 30, 2013, from the taxes levied or revenue apportioned pursuant to Section 1104 of Title 47 of the Oklahoma Statutes, and Sections 1354 and 1402 of Title 68 of the Oklahoma Statutes and subsection B of Section 2355 of Title 68 of the Oklahoma Statutes and subsection D of Section 2355 of Title 68 of the Oklahoma Statutes and apportioned to the General Revenue Fund.  Such amount shall be considered the initial base amount;
2.  Determine the combined amount of increased revenue, if any, collected from the taxes levied or revenue apportioned pursuant to Section 1104 of Title 47 of the Oklahoma Statutes, and Sections 1354 and 1402 of Title 68 of the Oklahoma Statutes and subsection B of Section 2355 of Title 68 of the Oklahoma Statutes and subsection D of Section 2355 of Title 68 of the Oklahoma Statutes over and above the initial base amount for the fiscal year ending June 30, 2014, and apportioned to the General Revenue Fund;
3.  If the amount determined pursuant to paragraph 2 of this subsection is five percent (5%) or greater than the amount computed in paragraph 1 of this subsection, and the required finding described in subsection B of this section has been made, the Board shall make a finding that the top marginal income tax rate levied pursuant to the provisions of division (8) of subparagraphs a and b of paragraph 1 of subsection B of Section 2355 of Title 68 of the Oklahoma Statutes shall be decreased by twenty-five hundredths (0.25) for the next tax year beginning on January 1; and
4.  If the amount determined pursuant to paragraph 2 of this subsection is less than five percent (5%), or the required finding described in subsection B of this section has not been made, the Board shall make a finding that the top marginal income tax rate levied pursuant to the provisions of division (8) of subparagraphs a and b of paragraph 1 of subsection B of Section 2355 of Title 68 of the Oklahoma Statutes shall not change for the next tax year beginning on January 1.
D.  At the meeting required by paragraph 3 of Section 23 of Article X of the Oklahoma Constitution to be held in December 2015 and, subject to the limitations imposed by subsection F of this section, at any subsequent December meeting, the State Board of Equalization shall, in addition to the determination required by subsection B of this section:
1.  Determine the combined amount of revenue collected from the taxes levied or revenue apportioned pursuant to Section 1104 of Title 47 of the Oklahoma Statutes, and Sections 1354 and 1402 of Title 68 of the Oklahoma Statutes and subsection B of Section 2355 of Title 68 of the Oklahoma Statutes and subsection D of Section 2355 of Title 68 of the Oklahoma Statutes for the fiscal year ending on the second June 30 date immediately preceding the December meeting date and apportioned to the General Revenue Fund;
2.  Determine the combined amount of increased revenue, if any, collected from the taxes levied or revenue apportioned pursuant to Section 1104 of Title 47 of the Oklahoma Statutes, and Sections 1354 and 1402 of Title 68 of the Oklahoma Statutes and subsection B of Section 2355 of Title 68 of the Oklahoma Statutes and subsection D of Section 2355 of Title 68 of the Oklahoma Statutes for the fiscal year ending on the June 30 date immediately preceding the December meeting date and apportioned to the General Revenue Fund;
3.  If the amount determined pursuant to paragraph 2 of this subsection is five percent (5%) or greater than the amount computed in paragraph 1 of this subsection, and the required finding described in subsection B of this section has been made, the Board shall make a finding that the top marginal income tax rate levied pursuant to the provisions of division (8) of subparagraphs a and b of paragraph 1 of subsection B of Section 2355 of Title 68 of the Oklahoma Statutes shall be decreased by twenty-five hundredths (0.25) for the next tax year beginning on January 1; and
4.  If the amount determined pursuant to paragraph 2 of this subsection is less than five percent (5%), or the required finding described in subsection B of this section has not been made, the Board shall make a finding that the income tax rate levied pursuant to the provisions of division (8) of subparagraphs a and b of paragraph 1 of subsection B of Section 2355 of Title 68 of the Oklahoma Statutes shall not change.
E.  Except as otherwise provided by subsection F of this section, the procedures prescribed by this section shall be repeated by the State Board of Equalization each year until the top marginal income tax rate levied pursuant to division (8) of subparagraphs a and b of paragraph 1 of subsection B of Section 2355 of Title 68 of the Oklahoma Statutes equals three and twenty-five hundredths percent (3.25%) using incremental decreases of twenty-five hundredths (0.25) as otherwise prescribed by this section and by the provisions of division (8) of subparagraphs a and b of paragraph 1 of subsection B of Section 2355 of Title 68 of the Oklahoma Statutes.
F.  The revenue comparisons required by this section shall be made for a period of ten (10) years, beginning December 2014, and ending December 2024, and if the top marginal income tax rate prescribed by division (8) of subparagraphs a and b of paragraph 1 of subsection B of Section 2355 of Title 68 of the Oklahoma Statutes has not been reduced to three and twenty-five hundredths percent (3.25%), no further revenue comparisons shall be required to be made.
SECTION 3.     REPEALER     68 O.S. 2011, Section 2355.1A, is hereby repealed.
SECTION 4.  This act shall become effective January 1, 2014.

54-1-5046	MAH	01/09/13