The Guillotine for Corporate Welfare Queens

[Double A]

FEBRUARY 27, 2008

Go Ahead and Jump

Leap year looks like another controversial session for the state legislature

BY BRIAN ERVIN

"This has been a boondoggle for many, many years," said state Sen. Randy Brogdon, R-Owasso, about what he described as the "risky business" of "special corporate welfare."

"It is immoral for the state government to use taxpayers' dollars to handpick which businesses are going to prosper," he also said.

Because of his vehement opposition to such "corporate welfare," Brogdon is just about giddy over a bill proposed this session by Sen. Mike Mazzei, R-Bixby.

He and some other lawmakers expect that it will be the demise of many of the state "handouts" enjoyed by big businesses in Oklahoma in the form of tax credits. Or, at least, it will eliminate the risk they associate with them.

Senate Bill 2024 would put a sunset and review process in place for the currently uncounted number of tax credits granted by the State of Oklahoma, to see which are helpful and which are harmful, and to winnow them accordingly.

Which, of course, might sound pretty boring to the casual reader, right?

What isn't boring, though, is the enormous chunk of revenue lost to the State of Oklahoma through such incentives.

"It's well over a billion dollars each year," Mazzei told UTW.

If the concept of a billion dollars a year in tax giveaways isn't staggering enough on its own, to put it in it's proper perspective, the entire state budget for last year was about $7 billion.

The UTW Article

[Ed W]

You overlooked one part of the article that said businesses do not pay sales taxes on many goods they purchase, and that all states allow this for business.  Removing it would put Oklahoma businesses at a disadvantage.

As always, the devil is in the details.  We need to know those details in order to make an informed decision.  For the time being, Randy Brogdon's statements appear to be little more than political posturing, bold statements without any supporting evidence.  If he's right and there are such huge revenue losses due to special treatment for various entities, I'll support him 100%.  But if this all quietly goes away, it will tell me that it was all political braggadocio.

[cannon_fodder]

quote:"It is immoral for the state government to use taxpayers' dollars to handpick which businesses are going to prosper," he also said.

+1

What it breezes over is the fact that those tax payers include many of these companies competitors.  If Tulsa was to grant Vanguard large tax incentives to stay here we would be, at least in part, taxing Dollar Thrifty (a more loyal Tulsa company) to give money to their competitor. This happens in nearly every hand out initiative.

We need to stay competitive by making it a business friendly environment, but direct subsidies to chosen companies or industries need to be carefully considered.  

I also agree that this will go away. The reason our tax codes at the state and Federal level is such a mess is because of the large number of special interests (including the elderly, farmers, poor... not just large companies) that get a line added, removed, or changed.  It will be hard to get rid of those and/or they will come quietly back into being.  Yet another reason national sales tax ideas interest me.

I have not read the specifics of this Bill as it is very, very long:
http://webserver1.lsb.state.ok.us/2007-08SB/SB2024_int.rtf