August 29, 2011

‘Runaway Train’ of Tax Breaks

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OKLAHOMA CITY – A lawmaker heading a panel that is scrutinizing tax credits and exemptions calls them a runaway train.

“It is way out of proportion,” said Rep. David Dank, R-Oklahoma City, co-chairman of a 10-member panel studying tax credits and exemptions.

“It is almost cancerous. It keeps going on and on and on. You can’t stay in business if you keep giving way the store, and that is what we are doing.”

The Task Force for the Study of State Tax Credits and Economic Incentives will make recommendations to lawmakers about which ones should be eliminated.

“Something is going to be done,” Dank said.

The study has gotten a lot of attention, he said.

“The lobbyists are just coming out of the woodwork,” Dank said. “And that is fine because they are being paid to do what they are doing. I don’t have any problem with that. I just tell them my views. I am very outspoken.”

Dank estimates the state has about $250 million tax credits and exemptions on the books while others have put it $500 million.

“We don’t really know how many have been issued because most of them have a five-year carry forward,” Dank said. “That means they can use them up to five years after they are issued.”

They range from breaks for rehabilitating historic buildings to wind energy and job creation in rural areas.

Dank is direct and to the point. At the panel’s third meeting last week where three credits were reviewed, Dank didn’t sugarcoat it.

“If you want to come to the microphone and defend your tax credit, I would ask you to begin by presenting documentation of exactly how many long-term jobs your favorite tax credit has created,” Dank said.

“That is the best way to judge the effectiveness of these tax credits, and it needs to be the first thing you tell us.”

The bottom line for Dank is that the exemptions and credits involve money generated by taxpayers. He won’t hesitate to tell a beneficiary that he doesn’t like their exemption or credit or that taxpayers shouldn’t be subsidizing something that has no direct benefit.

His handling of the panel has drawn praise from Republicans and Democrats. Senate Minority Leader Andrew Rice, D-Oklahoma City, a member of the panel, said Dank has been pretty clear on what the mission is and has done a good job at researching the topics.

State Auditor and Inspector Gary Jones agrees with Rice’s assessment.

“I think that there are places to give incentives to achieve certain goals,” said Jones, a Republican who serves on the panel. “I think there needs to be accountability and transparency and something that can be measured to determine what is the cost-to-benefit ratio. I don’t want any fluff. I want to see the numbers.”

Dank also serves on a panel reviewing the state’s tax code that will make recommendations to lawmakers about how to make it simpler and study prospects for reducing or eliminating the income tax. The panel is set to meet in September.

Dank favors eliminating the income tax and replacing it with a consumption tax.

“I am a big believer that groceries ought to be exempt, and they are not in Oklahoma, and prescription drugs and basic needs of people,” Dank said.

“I am a big believer in that. So I would like to exempt those and get rid of a lot of the exemptions that I think are just the same as some of these tax credits which are just giveaways to special-interest groups through the years.”

The next meeting of the Task Force for the Study of State Tax Credits and Incentives is set for 10 a.m. Sept. 7 in the Oklahoma House chamber.