Could Liberals and Conservatives Agree to Reduce Special Tax Breaks?
There has been a great deal of political discussion this year about the state and federal deficits. Putting aside the matter of whether it’s good economic policy during a severe recession to incur more debt at the federal level, the fact of the matter is that a large portion of the electorate believes that deficits have gotten too high and need to be reduced.
In light of the increased concern about red ink, could the next session be a time when state and federal policymakers take a much closer look at “tax expenditures” (or special tax breaks)? Will those tax breaks be on the table along with other spending measures, as budget writers strive to bring revenue and spending into balance?
A short report issued this week by Citizens for Tax Justice (CTJ) outlines reforms that could serve as a useful starting point for curbing lawmakers’ addiction to tax expenditures. They make the case that procedural changes in state budget processes are the key to beginning to rein in tax expenditures. According to the report, the following types of process changes would make it easier to enact and maintain tax reform:
• Create a tax expenditure performance review system, or bring tax expenditures into existing government performance review systems.
• Cap and sunset tax expenditures in order to mimic the appropriations process.
• Distribute responsibility for tax expenditures among the relevant legislative subject matter committees.
• Enact, or improve upon tax expenditure reports.
• Require increased disclosure of business tax expenditure beneficiary data.
After the elections, we’ll need to find ways that legislators in both parties can work together to move beyond the lip service that so many politicians pay to fiscally responsible budgeting. Perhaps reforming the process for approving or continuing special tax breaks would be a place where a broad spectrum of policymakers could agree.