Do you know where your money is? Or more specifically, do you know where your tax dollars are? Are they going towards a new football stadium, as reported in Bloomberg BNA’s Daily Tax Report by Christopher Brown? Are they funding next summer’s biggest blockbusters? Is your state or town keeping them in a mason jar buried in the backyard? Well, you’re in luck! It has never been easier to find out what your state is spending money on.
As has been discussed here before, states have slowly begun to show an interest in evaluating their tax credits and incentives. Along similar lines as these evaluation programs is a new and expanding emphasis on making information about state tax expenditures, namely credits and other types of incentives, publicly available.
As first reported in Bloomberg BNA’s Daily Tax Report by Denise Lugo, The Governmental Accounting Standards Board (GASB) recently made state tax news by issuing a new set of rules regarding what financial information certain governments must make available. These new GASB rules will require state and local governments to make disclosures regarding “tax abatements.” Essentially, a tax abatement occurs when a government agrees to either not collect or reduce some form of tax in exchange for the taxpayer agreeing to meet certain requirements, such as creating jobs or making investments. Although these new rules fail to address a number of concerns, they still give advocates for financial transparency at state and local government levels a reason to celebrate, according to an Aug. 14 Good Jobs First press release.
In addition to these new rules, there may be another avenue for citizens to keep an eye on where their tax dollars are going. According to The PEW Charitable Trusts, all 50 states have some form of a so called “checkbook website,” where anyone can look up information about the state’s spending. The article goes on to caution, however, that even though your state may have such a page, it might not be all that great.
Tax credits and incentives have never been, and likely never will be, an exact science. However, it appears that increased transparency is another weapon in the arsenal of those who advocate for greater safeguards when state and local governments issue these economic stimuli. Since nothing is free, the only thing that matters is who is going to pay, and greater financial transparency might be one way for the states to make it easier to find out.
Continue the discussion on Bloomberg BNA's State Tax Group on LinkedIn: Will better financial transparency lead to more cost-effective tax credits and incentives?
For more information about state tax credits, check out Bloomberg BNA’s Credits and Incentives Portfolios by signing up for a free trial of the Bloomberg BNA Premier State Tax Library today.
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