Accountability needed regarding tax credit program
The Associated Press is reporting that the state of Kansas gives up millions of dollars in tax revenue from individuals and corporations each year, through tax credits, but does not disclose who the individuals and corporations are.
The AP reports that it is proving difficult for it to find out which Kansas companies and individuals are getting the state tax credits.
What’s the big secret?
Kansas apparently is one of very few states that does not disclose its tax credit recipients. Some Kansas officials argue that it’s nobody’s business but the tax credit recipients’ business.
Is this the way state tax credits are supposed to be awarded? Secretly?
Greg Leroy, executive director of the corporate tax break watchdog group called Good Jobs First, does not believe so.
Leroy says the lack of disclosure provides no way of analyzing whether corporate tax breaks actually work.
When the state doesn’t disclose anything about outcomes of deals, actual jobs created, actual wages paid – outcomes expected when the state issues tax credits – you can’t have an honest cost-benefit debate, Leroy said.
“That’s just irresponsible,’’ Leroy said.
State tax credits are designed to allow recipients to lower their tax liability as a reward for making certain investments such as scholarship programs, increasing their company’s workforce or increasing wages for existing employees.
The Kansas Department of Revenue reports that Kansas recorded $530 million in taxes not paid due to tax credits awarded n 2015. The AP said that amount totaled one/twelfth of the state’s $6.1 billion general fund budget.
The Kansas City Star newspaper reported that Kansas spends less on public safety ($398.7 million) than it waives as tax credits.
In 2015, Kansas corporations received more than $90 million in tax credits and individual Kansans got the rest.
Kansas has suffered several state budget shortfalls in a row, making it all the more important for state officials, state elected officials and the public to be able to evaluate the performance of the state’s tax credit program.
State Rep. Tom Sawyer, D-Wichita, a member of the House Tax Committee, said it’s not right that the state awards $530 million in tax credits but apparently keeps the tax breaks secret.
Rep. Sawyer said that state representatives like himself aren’t even aware of how and whether the state tax tax credit program is working.
The public (the state taxpayers) certainly have the right to know which corporations and individuals are receiving state tax credits and whether those corporations and individuals are fulfilling their ends of the deals.
Rep. Sawyer agreed that state lawmakers – and the taxpayers themselves – need to be able to determine if the tax breaks that are awarded are actually working. That can’t be done if the state is keeping secret the names of the tax credit recipients.
Kansas should simply do what neighboring Missouri already does – publish an annual list of all of its state tax credit recipients and what they are doing to earn the tax breaks.