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How tax cuts for the rich led to the Oklahoma teachers strike

Posted by Jerrald J President on April 14, 2018 at 9:25 AM


https://www.vox.com/platform/amp/policy-and-politics/2018/4/9/17214924/oklahoma-teacher-strike-tax-cut-rich-charts

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  Not to be cruel, but what did these highly educated teachers think would happen if you cut property taxes and give tax abatements to corporations and businesses? This ideology of  free market capitalism is toxic. By JJP

 

How tax cuts for the rich led to the Oklahoma teachers strike

Three charts explain how this fight was a decade in the making.

By Alvin Chang 


The Oklahoma teachers strike is now in its second week — but it was a long time in the making.


In the mid-2000s, the Oklahoma state legislature approved several tax cuts that largely helped the rich. “That was a time when the economy was booming and oil prices were high, and for a time it looked like you could have it all,” said David Blatt, who runs the Oklahoma Policy Institute, a nonpartisan think tank.


But after the economy tanked in 2008, the state legislature didn’t change course. In fact, it kept cutting taxes for the wealthiest Oklahomans while leaving schools underfunded.


This has made Oklahoma teachers deeply distrustful of their state leaders.


Before the strike last week, the state legislature tried to avert the work stoppage by passing a $447 million tax increase that effectively gives teachers an average annual pay bump of $6,000. That concession from the state legislature didn’t meet the teachers’ full demands, but it was a huge win considering the state legislature hadn’t approved a tax increase since 1990.

 

But teachers are still angry and distrustful of state legislators, and they have plenty of momentum heading into day eight of the strike.


To fully contextualize this situation, let’s run through a few charts:

1) Oklahoma has been cutting the top tax rate for more than a decade


In the mid-1990s, Oklahoma’s top individual income tax rate was lowered to 6.65 percent.


But there was a caveat to this tax cut: If the state didn’t raise enough money, that rate would jump back up to 7 percent. In 2003, that’s exactly what happened — but state leaders repealed that trigger. They kept the rate at 6.65 percent.


And they never looked back:


Before the recession, the state could have tax cuts while also funding public services like education. Then the recession, as well as downturns in the oil and gas industry, hit Oklahoma hard.


Blatt told me, “There was no corrective mechanism to raise the taxes back up — particularly because some of these tax cuts were backloaded and phased in. Basically, we’ve just had a one-way ratchet where taxes had been lowered.”

2) These tax cuts hit education the hardest


These tax cuts, which were passed in 2004, ultimately caused Oklahoma to lose about $1.022 billion in annual revenue. (This is in 2016 dollars.)


The Oklahoma Policy Institute extrapolated that out to the proportion education typically receives. It found that the tax cuts took away about $350 million from state education every year.


The state’s education budget is about $2.9 billion.

3) Who benefited most from the tax cuts? The wealthy.


But these tax cuts weren’t being given back to middle-class Oklahomans. For the most part, these cuts benefited the affluent and wealthy.


In fact, the bottom 80 percent of earners saved the same amount as the top 1 percent.


The Republican-controlled state legislature argued that these tax cuts would help spur the economy in Oklahoma. But the Center on Budget and Policy Priorities has found that these state income tax cuts aren’t good ways to create growth:


This approach is not supported by the preponderance of the relevant academic research and has not worked particularly well in the past. The states that tried deep income tax cuts over the last three decades have not seen their economies surge as a result.


4) Falling teacher compensation is a larger national trend


Once you adjust for inflation, teacher pay is falling nationwide.


Meanwhile, their health care costs are increasing.


These trends are what spurred the teachers strike in West Virginia and what has fueled talk of teachers strikes in several other states.


What ended the strike in West Virginia was a 5 percent pay raise and a hold on increasing health insurance costs, concessions that were enough to satisfy teachers.


But in Oklahoma, teachers want a $10,000 pay bump in the next three years — $6,000 the first year and $2,000 the second and third years. They’re also demanding raises for school support staff and all state employees, as well as increased funding for their schools, their pensions, and their health care.


State leaders gave them a part of what they wanted and appear to be waiting out the teachers. But after more than a decade of cutting taxes for the wealthy while education is underfunded, it’s unclear what will be enough for teachers to end this strike.


“We absolutely expect there to be as many teachers here Monday and Tuesday, if necessary, and Wednesday and Thursday,” Alicia Priest, president of the teachers union, told the Oklahoman.


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