Who Gets Alabama’s Tax Giveaways?
The Center for a Better South has released a new report today called DOING BETTER: Progressive Tax Reform for the American South. They offer eleven ideas to make taxes fairer in 21st century economies.
Idea #10: More tax accountability leads to better decisions.
Each Southern state should annually publish a comprehensive tax expenditure report to provide more accountability and information to lawmakers so they can make better decisions.
Quick, give me just 30 seconds before your eyes glaze over. This is important.
Alabama (and other states) gives away tremendous sums of money in tax giveaways or incentives. Everybody else, of course, has to make up the difference. How much money does Alabama give away in tax breaks? We don’t know.
These tax breaks are formally called tax expenditures. According to the report, “Across the U.S., 38 states had some form of tax expenditure report in 2004.” But not Alabama. You want to know how much Alabama’s education, Medicaid, or prisons cost us? No problem. It’s public information. How much do the tax giveaways cost us? We don’t know.
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You want to know how much Alabama’s education, Medicaid, or prisons cost us? No problem. It’s public information. How much do the tax giveaways cost us? We don’t know.
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If we want to give Mercedes mega-millions in tax incentives to move here and create jobs, I’m not saying it’s a bad idea, but we should know what it is costing the state, what it is costing you and me. If we want to continue all the other tax breaks, that might be a grand idea, but if the rest of us are paying to make up the difference then we should know how much they cost. If everybody has to pay a little extra tax elsewhere so I don’t pay sales tax on my dry cleaning, well, that’s fine, but we should know the cost of our tax giveaways. You don’t know, I don’t know, and the legislators don’t know.
Most of these breaks gets passed into law and stay on the books for years without review. The rest of us pay more to make up the difference. We should know how much these tax giveaways cost us.
Why shouldn’t we? Tax accountability is a good thing. We should press our legislators to have Alabama join the other 38 states that publish tax expenditure reports.
More information is good.
you would agree that alabama is doing a herculian job in recruiting top industry. Alabama leads in the southeast in terms of new industry recruitment/capita. a significant portion of the new industry is directly attributable to tax expenditures. a problem with publishing information regarding tax expenditures is that it would create expectations, perhaps, unrealistic, in future industries and at the same time would create disastisfaction with industries that are already here.
Comment by Anonymous — June 23, 2006 @ 12:44 pm
Transparency in tax policy is a good thing.
Secret use of hundreds of millions of dollars is not - whether through direct expenditures or tax expenditures. Does the public have the right to know how tax dollars are used, and does that trump the need to prevent disappointments or raised expectations among corporations?
However, to partially address your concern, a tax expenditure report might lists costs grouped by kinds of companies, or perhaps by types of tax breaks/incentives rather than list the specific companies.
And perhaps, while I would not agree that this is necessary, some particular elements of such a report might be available only to legislators. Right now, even legislators do not know the value of all the tax breaks & incentives that have been authorized.
And as I said, the rest of us are paying for them. Nobody knows how much they cost us. Some of these benefits and exemptions have been around for decades, perhaps because someone or some particular industry had the influence to get them passed. They may fit in no model of economic development and run counter to tax fairness, but still they linger. I think it would be very difficult to muster a strong argument that taxpayers shouldn’t know what these are and how much they cost.
At the very least, all of these tax breaks should have sunset provisions so that they expire unless they are renewed. Regularly. Maybe annually. Let’s review them. If a tax giveaway reflects good public policy that encourages economic development, great, let’s renew it. But don’t let a tax giveaway sit unexamined on the books for decades that the rest of us have to pay for.
Comment by Danny — June 23, 2006 @ 3:46 pm
You’re wrong. Information on incentive packages is released to the press. That’s why we know how much Mercedes got, EADS got, Hyundai, etc. If you’re looking for one book that has all the information, Alabama does not. Why spend the money to publish a book when the info is released to the public via the media?
Comment by Anonymous — June 27, 2006 @ 4:31 pm
You might be right if we were talking only about those particular incentives. But you underestimate how vast the number of incentives, breaks, and giveaways is. Why shouldn’t we know how much it costs for the tax breaks we give the American Bowling Congress every year? If we are going to single out Stringfellow Memorial Hospital for tax breaks, shouldn’t we know how much it costs? Maybe it’s a great idea to exempt the sale of 5-ton railroad cars from sales tax, but we should know how much all of these things cost us. If it’s a good idea to single out a couple of state hospitals to say they can sell food, snacks, tobacco, and stationery without sales tax, then great, but we should know how much it costs. Right now, it’s invisible and the rest of us are making up the difference.
If the public has the right to know how much schools or prisons cost us, shouldn’t we have the right to know how much these things cost us?
Comment by Danny — June 27, 2006 @ 6:20 pm
“Why spend the money to publish a book when the info is released to the public via the media?”
Good point. In fact, why does Winn-Dixie spend money on receipt printers, paper, and ink when the prices of some of their goods are published in the sales fliers that they send to my mailbox?
Ok, that was dumb, but here’s my point:
In order for our representative democracy to work, we have to hold our representatives in government responsible for their actions. In order to do that, we need to know what our representatives are doing. In the case of the legislature, we need to have a complete and accurate account of how much we are spending.
It seems like this would be a pretty popular view in a state that is so afraid of taxes.
Comment by Joe — September 17, 2008 @ 3:40 pm
and who exactly is “the media”?
Does “the media” refer to the vast, array of newspapers and television news sources?
I think there be should some published document where I can find all of these tax expenditures, because I am paying for them. I think that that document should be published by the body that is responsible for expending those taxes.
Comment by Joe — September 17, 2008 @ 3:52 pm