Paying Taxes to the Boss in Oklahoma

June 24, 2015

A recent report by Oklahoma Watch, an investigative journalism non-profit, shows just how far the Sooner State has plunged into the dubious practice of turning the withholding taxes of workers into subsidies for their bosses. Since 2009 more than $30 million in employee personal income tax (PIT) payments have been diverted as part of a slew of deals that will eventually cost more than $89 million. A large portion of the benefits will go to major companies, including $20 million to Goodyear Tire & Rubber, $15 million to Hitachi Computer Products, and $10 million to Michelin.

While the diversions are perfectly legal and don’t cost the employees anything, they are not good economic development practice. As Good Jobs First argued in a 2012 report on PIT programs nationwide, these subsidies do serious harm to state revenues, jeopardize public services and fuel ruinous interstate job piracy.

Advocates say the programs create jobs. Even if this is true, the jobs come at a high price. The cost per job of the deals signed in Oklahoma comes out to about $86,000. It’s difficult to know whether these jobs are actually materializing, given the state’s poor performance reporting.

The poor disclosure also applies to the pay stubs of the workers, who are not told that their tax payments are going for something other than financing public services. If they knew they were paying taxes to the boss, they might make a stink about being compelled to participate in this wrongheaded practice.