Alaska Senate State Affairs Committee Regarding SB 29, The Alaska Tax Break Transparency Act
reportMy testimony today deals with Senate Bill 29, which would take an important first step toward achieving these goals by requiring regular scrutiny of Alaska “tax expenditures”—that is, the various tax credits, deductions, exemptions, and other breaks that reduce Alaska tax revenue.
The basic insight behind the idea of “tax expenditures” is that a law that cuts taxes for a specific individual or business is not meaningfully different, for budget purposes, from a law that directly spends money, writing a check to the same individual or business. The problem is that while the legislative budget process typically imposes regular and strict scrutiny of spending that is done directly by governments, in the absence of a tax expenditure report, the process requires little or no scrutiny of spending that is done through the tax code. Tax breaks are, in fact, government spending, and should be scrutinized in the same way that state appropriations are scrutinized—but all too often, they’re not.