THE BLOG

OP-ED: Stopping State Taxpayer Rip-Off Schemes

07/06/2006 05:34 pm ET | Updated May 25, 2011

Matt Singer, the communications director of the Progressive States Network, has a terrific new op-ed posted on TomPaine.com that analyzes how many states are throwing away taxpayer dollars in the name of "creating jobs." Singer points out that companies now "receive billions of dollars in taxpayer money," often don't create the jobs they promise, and instead use the subsidies to destroy local economies.

These subsidies come in the form of blatant giveaways of taxpayer dollars, or more nefarious tax loopholes, bought by corporate lobbyists in state legislatures:

"The implications of these shifts are clear. Citizens for Tax Justice reports that corporations manage to shield as much as two-thirds of their profits from state corporate income taxes. The result: money that could be spent on real economic development opportunities flows instead into the pockets of executives and the bill gets passed along to small taxpayers--local businesses and workers...These types of tax breaks are often described as "tax expenditures" because they more closely resemble government programs than true tax reform. Yet, unlike most government programs, tax expenditures often operate as implicit entitlement programs--there is no limit on how high the costs can go, no annual appropriations system and generally little legislative oversight. Even worse, there is no accountability of results. The companies file a tax return, claim the credit and never need defend the benefits produced by the tax provisions."

Progressive States is an organization that exists both to shine light on bad policies being pushed by Big Money interests, and also outline how these bad policies can be reformed. Thus, Singer goes on to point out how state legislators can put an end to these kinds of rip-off schemes:

"Fortunately, some states are choosing to take the road less traveled and actually address this largesse. Illinois now has a public website where any member of the public can track which companies are receiving tax breaks, what promises were made in return and whether the firm is delivering on its end of the bargain. This accountability has had a huge impact. One of the discoveries: 60 percent of the jobs created with public money pay too little for families to live on. Oversight is obviously a good place to start. Connecticut recently passed a comprehensive bill establishing a commission to review tax expenditures, measure the effects and audit individual companies to prevent abuse. Other states are considering sunset measures that would require regular reconsideration of tax expenditures to ensure that these hidden costs are fully considered regularly by policymakers. The Democratic minority in Ohio recently put forth a proposal to immediately sunset all tax expenditures, worth $6.3 billion annually. Future tax breaks would be reviewed every five years to prevent abuses and make sure the money was being spent wisely."

At a time of massive federal deficits and strapped state budgets, closing these corporate tax loopholes, ending unlimited giveways, and making sure tax incentives are actually creating the jobs they are supposed to are easy steps state legislatures can take. These are commonsense, populist policies that cut across party lines. All it takes is a little leadership at the state leve, - leadership that many states are moving forward on, and that the Progressive States Network is working to support.

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