Legislative Director, MASSPIRG
Legislative Director, MASSPIRG
Spending Through Tax Code Now More Transparent
MASSPIRG praised today’s release by the Department of Revenue detailed information about who receives some $170 million in certain corporate tax breaks.
“This is great news,” said Deirdre Cummings, Legislative Director for MASSPIRG, “any investment of public dollars in private enterprises must be held to the highest level of transparency and accountability. The legislature and the Administration should be commended for their leadership in making government spending more transparent and accountable.”
As part of the state’s Fiscal Year 2011 Budget, the legislature passed and the governor signed into law new transparency guidelines, which required improved transparency for refundable or transferabletax credit programs granted to businesses in the Commonwealth.
Transferable and refundable tax credits essentially act as state grants. When the value of the tax credit exceeds the recipient’s tax liability, the state gives the qualifying entity the difference. If the tax credit is transferable, recipients may sell the credit to 3rd parties allowing them to reduce their taxes owed to the state.
Massachusetts spends hundreds of millions of dollars every year in tax credits to businesses for many objectives including economic development, preservation of historic buildings and dairy farms, and the reclamation of brownfields. Tax credits have the same bottom-line effect on state budgets as direct state spending, since they must be offset by cuts to other programs or by raising other taxes. Once created, tax expenditures often escape oversight because they do not appear as state budget line items and rarely require legislative approval to renew. For these reasons, spending through the tax code is in particular need of disclosure.L
Massachusetts is a leader in making government spending more transparent and accessible to the public. The release of the data comes just a few weeks after the release of a Bi-partisan Tax Expenditure Commission report which called for greater transparency and accountability of all tax expenditures totaling $26 billion a year.
The Legislature should continue their progress toward full budget transparency and accountability by adopting the Tax Commission findings, which include: requiring improved reporting to measure and evaluate all of the state tax breaks; adopting “claw backs” requiring recipients to return the money if they fail to achieve the commitments required of the tax expenditure program; and mandating that all tax expenditures have a sunset date that would require a review and legislative renewal at regular intervals.
“Citizens expect information to be at their fingertips the way they can view their cell phone minutes or the location of a package,” said Cummings. “Putting spending information online helps hold government accountable and allows taxpayers to see where the money goes.”
Massachusetts received an “A-” in government spending transparency, according to MASSPIRG’s Following the Money 2012: How the States Rank on Providing Online Access to Government Spending Data, the third annual report of its kind. The leading states with the most comprehensive transparency websites are Texas, Kentucky, Indiana, Louisiana, Massachusetts, West Virginia, and Arizona.