The Math on Replacing Property Taxes With Sales Taxes

Every time I post something about property taxes, someone leaves the same comment.

Get rid of property taxes. Replace it with sales taxes.

I get it. Nobody enjoys the bill that shows up in November. And there's something appealing about the idea that you'd only pay tax when you chose to buy something and that no family would ever lose the farm over a property tax they couldn't pay.

So let's take it seriously. Not as a slogan. Instead let’s do the math.

What property taxes bring in

According to the Oklahoma Tax Commission's 2024 Ad Valorem Statistics Report, property taxes in Oklahoma collected nearly $4.8 billion last year.

That's homes, farms, and businesses and similar. The $4.8 billion leaves out utilities, railroads, and pipelines. Those are taxed too, but they’re counted separately so I left them out. That means the real number is higher than $4.8 billion.

And whatever you think of the property tax, that $4.8 billion is paying for something right now. Schools. County roads. Fire protection. Sheriff's deputies. It doesn't stop being needed just because we stopped collecting it.

What sales taxes bring in

Most Oklahomans pay between 9 and 10 percent in sales tax at the register. Four and a half points of that is the state's. The rest is city and county, and it varies by where you live.

So how much revenue does the state's 4.5 percent generate? According to the Tax Commission's 2025 Revenue and Apportionment Report: about $3.3 billion.

Say we double it. Four and a half percent goes to nine. That second four and a half points raises another $3.3 billion. That’s news sales tax money that could go toward replacing local property taxes.

That still leaves us $1.5 billion short.

If doubling the state sales tax doesn't get us there, what does? To actually replace the property tax, the state’s portion would need to be somewhere around 11 percent. That's on top of what your city and county already charge.

For most Oklahomans, that means paying over 15 percent every single time they buy something.

For perspective

The Tax Foundation tracks combined state and local sales tax rates across the country. Louisiana currently has the highest in America, at just over 10 percent.

Oklahoma’s new sales tax rate would be half again higher than that.

What happens when the economy turns

Sales tax is the first thing to go in a downturn. When people lose hours, when oil prices drop, when a plant closes, people stop buying and sales tax collections fall. The revenue disappears exactly when communities need services most.

We don't have to imagine this. We lived it.

In 2015, the state's sales tax brought in $2.4 billion. Two years later, in 2017, it was down to $2.2 billion. Two hundred million dollars, gone in two years.

Property tax collections didn't do that. They don't swing like that. Sales taxes do.

That's not a small distinction. It's the difference between a revenue source you can build a school year around and one you can't.

What about the obvious objections?

I'd rather answer these here than in the replies.

“We won’t need to increase the rate. Just expand sales taxes to include services."
Taxing those would bring the required rate down. It wouldn't bring it down to nothing; the services base isn't big enough to cover $4.8 billion on its own. And it means your barber and your mechanic start collecting sales tax on every job. That's a real policy conversation worth having. It just isn't a free one.

"Sales tax is voluntary. You choose to buy."
Not for fuel. Not for utilities. Not for clothes, or a water heater, or medicine. And while the state stopped taxing groceries, your city and county didn't. They call them necessities for a reason.

"Just cut spending instead."
That's a fair position, and plenty of Oklahomans hold it. But it's a conversation to have with your city council, your county commissioners, and your school board — the people who actually set those budgets, and the people you elect. This objection is an argument about the size of your local government. It isn't an argument about swapping one tax for another.

Why I’m doing these videos

I believe the more people understand, the better decisions they make at the ballot box.

Property tax is one of the least understood parts of Oklahoma government and one of the most consequential. It funds the institutions closest to you — the ones you can drive to, walk into, and complain at.

So when someone proposes eliminating it, ask them to show you how their proposal works.

This video is the arithmetic. Every number comes from the Oklahoma Tax Commission or the Tax Foundation, and I've linked the sources so you can check them yourself. Please do.

I've got more property tax videos in the works. There's a lot here worth explaining.

If someone in your feed says we should just replace the property tax with sales taxes, send them this. You probably won't change their mind. But they'll have the real numbers, and that's worth something.

Sources

• Oklahoma Tax Commission, 2024 Ad Valorem Statistics
  Property tax data

• Oklahoma Tax Commission, FY2025 Revenue and Apportionment Report
  State sales tax data

• Tax Foundation, Louisiana
  Combined state and local sales tax rankings

Rep. Andy Fugate represents House District 94 in the Oklahoma House of Representatives.