The Best of State Tax Expenditure Disclosure
by Joe Cox*, 2/16/2011
While the federal government offers no insight into where an estimated $1 trillion in tax breaks go every year, some states are beginning to provide information about which corporations benefit from local tax spending programs. None of the state websites are perfect, but their strong suits could be combined to create tools for disclosing federal corporate tax expenditures.
Here are some highlights:
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The Michigan Economic Development Corporation’s Project website literally shows users where their tax dollars are going. They can zoom in on their community and see who got what. As beautiful as the site is, it would be nice to have a database mode for easy access to the raw data. Besides, showing private investments on the front page, while requiring a click through to see how much in taxes a company avoided is burying the lead.
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While it is important to disclose which tax expenditure program costs a state the most revenue, grouping tax expenditures by acronyms (Kentucky’s categories include unintelligible acronyms like: KJDA, KEDFA, KREDA, LGEDF and KEOZ. Informative, huh?) makes a site impenetrable to the general public. Wisconsin’s site allows you to sort by the type of corporate benefit and then gives you lots of useful information based on what you think is important. How many jobs did they say they were going to make if they didn’t have to pay a several million dollars in taxes? How many did they actually create?
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Oklahoma’s site lacks a robust search functions and does not allow users to sort, but it does allow you to find $20 million in tax breaks to Koch Industries in 2007 and 2008. (Nice to see such government largess to billionaires the year before Oklahoma had the largest budget deficit in the country.
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Sometimes you get so bogged down looking at who gets what tax breaks that you forget the big picture. Iowa’s tax expenditure site features a tab at the bottom of the page that sums up tax expenditures in a category. Wait, they gave a hundred million dollars away? I thought Iowa had a $700 million budget deficit?
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Supposedly corporate tax breaks create jobs. Unfortunately, assessing whether and to what extent there was real job creation is next to impossible, because without proper disclosure most companies are free to fire people after they pocket prospective state revenues. Illinois gives you all of the standard information about who received a tax break on the front page. If you really want to see what happened you can click on a details link and find out exactly how many jobs were supposed to be created or retained, how many were and how much they pay (the average refinery employee makes almost 100K?).
The federal government should take a page from the states and let us know what corporations receive tax spending. A good tax expenditure site should be allow search flexibility while retaining legibility, show the total amount of spending by category and provide additional details upon request. Michigan shows it is possible to get creative and make disclosure fun. If a company feels it is doing so much good that it should not have to pay its full tax bill, all we ask is that they let the public know why. Fair enough?
Editor's note: The author of this post inadvertently failed to credit Good Jobs First for providing valuable insight and information. For more on the issues raised here, see Good Jobs First's study Show Us the Subsidies.
