If you have read my articles in the past, you know that I am a strong opponent of special perks and that I oppose efforts to build special loopholes into the tax code for a privileged few. I am happy to be able to report that one of the most secretive of these programs is about to receive some legislative review.
This type welfare takes place when the Legislature passes laws which financially benefit certain interests by creating a complicated scheme that enriches the proponents of the plan. Usually, advocates of these efforts carefully craft their arguments, claiming that if the Legislature provides them with special incentives, a massive amount of economic development will occur. This argument puts pressure on other legislators to support the incentive, since they do not want to be seen as voting against economic development.
Their legislation is created in a manner much like this:
a) Those who want to benefit from big government hire a powerful lobbying firm which has built strong relations with legislators by spending time with them, investing in their campaigns and providing them with personal gifts like free meals or entertainment;
b) Those lobbyists help draft the plan into law and utilize their relationships with powerful legislators to sponsor the legislation;
c) This legislation may be introduced late in the legislative session when few legislators understand what is being proposed and have very little time to understand the legislation's impact.
The people who are hurt the most by these schemes are Oklahoma small businesses owners who cannot afford to hire powerful lobbyists to build a special loophole in the law. These business still have to pay a high tax rate without benefitting from the special perks. Instead of paying for the creation of special loopholes, the state government should focus on reducing taxes across the board for Oklahoma individuals and businesses. It is this policy that will result in true economic development and will make it harder to the powerful to use the tax code as a way to achieve personal enrichment.
One of the most dangerous of the special perks is that of the state's transferable tax credit program. The reason this program is so dangerous is because it is very difficult to see who is claiming the millions of dollars to these credits which can then be sold to and claimed by a third party. These credits can be claimed and filtered through a number of LLC's which make it rather difficult to know who is benefiting and if these credits are really creating jobs, as their proponents would claim.
This year, Rep. David Dank and Senator Randy Brogdon, both outspoken critic of transferable tax credits, have won approval for a task force to conduct a study of the credits. The study should occur over the next few months and hopefully will be a starting point to allow people the opportunity to know who is using this program to benefit at the cost of the rest of the taxpayers. I think it is a great credit to Oklahoma's legislative leaders for allowing this important study to go forward.
I continue to believe that a strong majority of Oklahomans prefer small government and low taxation for all, as opposed to heavy taxation with loopholes for the privileged.