Muskogee (OK) Phoenix: Tax Credit Moratorium the Right Call
media mentionMcClatchy News Editorial
December 29, 2011
— The Task Force on State Tax Credits and Economic Incentives wants a one-year moratorium on all tax credits in Oklahoma while lawmakers consider the group’s recommendations for greater transparency and stricter oversight.
The hole has given more attention to reports like one released earlier this month by the Institute on Taxation and Economic Policy and Citizens for Tax Justice. That report showed that Oklahoma companies Devon Energy, Williams, ONEOK and Chesapeake Energy paid an effective corporate income tax rate of 0.6 percent, 1.1 percent, 1 percent and -2.1 percent respectively between 2008 and 2010.
“If we have learned one thing during the life of this task force it is that few members of the Legislature had even the dimmest concept of how many tax credits we had on the books, how much they cost or even where they were going,” panel head Rep. David Dank, R-Oklahoma City, said. “The taxpayers certainly didn’t either.”
The dollar amounts are in the hundreds of millions.
It’s certainly not petty cash.
Dank estimated that the one-year moratorium could save the state between $100 million to $150 million annually, although he said it’s difficult to tell because so many of the tax credits are not carefully monitored.
Among the tax credits examined by the panel were those for refurbishing historic buildings, building energy efficient homes, repairing railroad lines, filming Oklahoma-based movies, drilling for oil and natural gas, and producing coal or wind energy.
Let’s be clear: We support tax incentives that lead to job creation or job retention. But if the economic benefit doesn’t outweigh the tax incentive, that defeats the purpose.
The Oklahoma Board of Equalization certified this week that the state would have approximately $6.5 billion available for its 2013 fiscal year budget. That is $120 million more than last year, but it still means lawmakers will have to fill what amounts to roughly a $150 million budget hole.
The moratorium could plug that hole.
As long as the moratorium is done in the correct manner, it is the right decision.