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Capitol Insider: Per Capita Tax Collections Below 2006 Peak

OU Price Center for Economic and Management Research
After bottoming out in 2011, per capita tax collections have recovered, though they remain below pre-Great Recession levels of about $3,100.

In this episode of Capitol Insider, KGOU's Dick Pryor speaks with Dr. Robert Dauffenbach about his recent analysis of Oklahoma tax collections dating back to 1990. After adjusting for inflation and population growth, Dauffenbach found that per-capita tax collections remain below their pre-Great Recession peak.


Dick Pryor: This is Capitol Insider, your weekly look inside Oklahoma politics and policy. I'm Dick Pryor and my guest is Dr. Robert Dauffenbach, Senior Associate Dean for Economic Development and Impact at the University of Oklahoma Price College of Business. Bob, welcome. 


Robert Dauffenbach: Well thank you. Good to be here.


Pryor: Good to have you with us. You recently completed a comprehensive review of Oklahoma gross tax collections going back almost 30 years. What is the general trend over the years that you've studied?


Dauffenbach: Well, if you look back to 1990... at that time we were collecting on the order of $4 billion a year in total gross state tax collections. Now we're looking at $11 billion. And one can looking at those numbers and say well look how much more money we have, but, in fact, government goods and services cost a whole lot more than they did in 1990. In fact, government... The U.S. Bureau of the Census tells us that we have an increase of 233 percent. In other words, it cost $2.33 to buy what $1.00 bought in 1990. So we had a lot of inflation. We've also had population growth. We're 25 percent ahead on population. And so expenditures are spread out over a lot larger population base. So you have to adjust for inflation. You have to adjust for population changes to do apples to apples comparison. 


Pryor: So it's not as big a gain as you might think just by looking at the raw numbers. What about the per capita tax collections? How have those changed over time? 


Dauffenbach: Well, once you do the adjustments for inflation and population change that gives you a very good comparison base. We're looking at how much the burden, shall we say, of state tax collections are. And these started out on the order of 1990 of... Well we're looking looking here at about $2,700 per person. Now, that level stayed very constant until the mid 2000s. So when we adjust for population change we adjust for inflation. We see very varied results. We're at about $2,700  per person in real collections in the '90s, we rose all the way to $3,100, but then we had the financial crisis in 2008, 2009. That took us down at the $2,500 level. And then oil prices collapsed again in 2014, taking us even further. 


Pryor: And just a small fluctuation probably can make a big difference. 


Dauffenbach: Right. You talk about a$ 250 dollar fluctuation, which we've seen in per capita real collections.Now when you're talking to having a population that's near the 4 million mark in the state, well $250 times four million is a billion dollar swing. 


Pryor: Yeah, that's a lot. Legislative leaders have told us that they don't really see any need to raise further taxes. There have been some tax increases in the last two or three years, but they believe the economy is going very well, and we're in good shape. Do you see that?


Dauffenbach: I do see that. We've had some tax rate changes. We've had some new sources of revenue, such as motor vehicle sales taxes on use vehicles. We've had marijuana taxes coming into play. We've had other changes in gross production taxes or severance taxes and oil and gas have changed. So we're bringing in more and more revenue. And that has been significant, along with a good economy. So the good news is that we're looking at very sizable improvements in revenue on a real per capita basis. 


Pryor: Of course, we all know that Oklahoma has a boom and bust economy. Are there signs of regression coming? Are you seeing any signs that tax collections might start to wane in any area? 


Dauffenbach: I'm not seeing it. I'm not seeing any sign of... In fact we're on a pretty strong growth profile now in collections. I see it maybe topping out, but I don't see it going down. So I think we've got a fairly stable tax base right now, provided energy prices hang in there, and as a consequence we've got more capacity to do something about our problems that we continue to have throughout the years. 


Pryor: Dr. Robert Dauffenbach, thank you. 


Dauffenbach: Thank you. 


Pryor: That's Capitol Insider. If you have questions, email us a news@kgou.org or contact us on Twitter at @kgounews. You can also find us online at kgou.org and eCapitol.net. Until next time, I'm Dick Pryor. 

Caroline produced Capitol Insider and did general assignment reporting from 2018 to 2019. She joined KGOU after a stint at Marfa Public Radio, where she covered a wide range of local and regional issues in far west Texas. Previously, she reported on state politics for KTOO Public Media in Alaska and various outlets in Washington State.
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