Tighter control of tax credits
State Rep. David Dank, R-Oklahoma City, chairman of the Special House Committee on Tax Credits and Incentives, proposed a two-year effort to establish stringent criteria that would govern all existing and future tax credits, with a firm sunset date of July 1, 2014, beyond which all tax credits would be changed, reauthorized or eliminated.
“It is very clear that any effort to reduce state income taxes for all Oklahomans has run aground on the tax credit issue,” Dank said. “We cannot give real tax relief to all while we continue to pass out hundreds of millions of dollars in questionable tax credits to a favored few. My plan would take a deliberate look at every tax credit and put in place a permanent set of rules that would assure that any tax credit, now or in the future, would have to return real dollars to the state.”
Dank said the advantage of his two year approach would be to allow legislators elected last November 6 to have two full sessions to deal with the issue.
“Now it is time to perform, Dank said. “This Legislature has two sessions, beginning in February, to do the job we were elected to do.”
Dank said his first bill would put in place a set of criteria that would govern all existing or future tax credits. Those criteria would include stringent auditing, rigorous cost-benefit analysis, cost and time caps and a requirement that any tax credit would create or sustain quality’ permanent jobs. Dank said a primary goal will be ending the use of transferable tax credits that can be bought and sold.
“Our task force last year, and the special committee created this year, both debated those criteria at length and it was a consensus that we could no longer afford to offer tax credits that fail those tests,” he said. “It is time to write them into law.”
A second bill would sunset all existing tax credits as of July 1, 2014. Dank said that would give lawmakers two full sessions to examine each tax credit, change it to meet the new criteria, or allow it to expire on the sunset date.
He said his committee would lead that effort, but he hopes all legislators will resists efforts by lobbying interests to block reform.
“Last session we saw an unprecedented lobbying campaign to stop any tax credit reform,” Dank said. “As a result we came down to the last days of the session with income tax relief for all Oklahomans stymied by the drain on the state budget that excessive tax credits impose. The simple truth is that if we are going to cut and perhaps eventually eliminate our state income tax to make Oklahoma more attractive to business and jobs, we must clean out the tax credit stables first.”
Dank said the issue of state income tax relief is even more important now, since many Oklahoma taxpayers are likely to face higher federal income tax bills in 2013 as a result of the fiscal crisis in Washington.
“Oklahoma is fast becoming an island of sensible tax and fiscal policy in a sea of federal and state tax increases in places like California,” he said. “We can sustain and accelerate our economic growth if we keep it that way, but that just will not happen until we handle the tax credit mess. The next two years will tell the story.”