Oklahoma Looks To Become Next State To Enact Obamacare Medicaid Expansion
Patrick Gleason, Forbes.com Contributor

By seeking to raise taxes and expand Medicaid, Oklahoma Gov. Mary Fallin (R) and Sooner State lawmakers are pushing to make their state an outlier in a region full of states reducing tax rates, rejecting Obamacare, and exercising spending restraint. Gov. Fallin began the 2016 legislative session violating the Taxpayer Protection Pledge, a written commitment she made to Oklahoma taxpayers to “oppose and veto any and all efforts to raise taxes,” by calling for hundreds of millions of dollars in new taxes to address a $1.3 billion budget shortfall caused by low oil prices and years of overspending.

Gov. Fallin is calling for a cigarette tax increase of $1.50 per pack, a 146% rate increase that would make cigarettes sold in Oklahoma among the most heavily-taxed in the nation. Cigarette taxes are regressive, hitting low-income consumers the hardest, and are a volatile source of revenue. Increasing the state’s reliance on tobacco taxes will only make budgeting more difficult. In fact, according to industry data, only three of the 32 state tobacco tax increases that went into effect between 2009 and 2013 met or exceeded revenue projections. It is for this reason that tobacco tax hikes often serve as placeholders for future tax increases on the broader populace.

Another proposal to raise taxes being debated in Oklahoma is an expansion of the sales tax base to include more products and services. Generally, this can be the basis for pro-growth tax reform at the state level when paired with broad base rate cuts. However, that is not what is being proposed here. Oklahoma already imposes the sixth highest average state and local sales tax in the nation at 8.77%.

Given Oklahoma’s precarious fiscal situation, one might think greatly expanding state taxpayer liabilities by voluntarily expanding Medicaid under Obamacare would be unwise, but that’s exactly what Gov. Fallin and state legislators are considering this week. The Oklahoma Health Care Authority’s “rebalancing plan,” which former Senator Tom Coburn recently referred to as “simply Obamacare Medicaid expansion rebranded,” would actually kick 175,000 women and children off of Medicaid to open eligibility to as many as 628,000 of able-bodied adults, according to a report published by the Oklahoma Council of Public Affairs and the Foundation for Government Accountability.

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