When the legislative session ended without delivering promised tax relief, puzzled taxpayers wondered why. In fact, a primary reason our legislators failed to agree on tax cuts for all 3.5 million Oklahomans was that they failed to address a widely abused tax credit system that gives hundreds of millions each year to a favored few.
We began with two goals: address the tax credit mess and use those savings to help fund tax relief for all. The task force I chaired last year clearly showed that Oklahoma's tax credit system was broken and widely abused.
Tax credits that help create jobs and return more than they cost to the state treasury are worth it; others are simple giveaways, generously subsidizing industries that neither need nor merit the help. They're a drain on state revenues that must be made up by ordinary taxpayers who don't have the luxury of cashing in multimillion-dollar tax credits each year.
For example, builders of wind farms can take advantage of a five-year property tax exemption, plus federal and state production and investment credits. There are so many tax breaks for this industry that taxpayers are paying a large share of its total costs.
Would wind farms be built without all those giveaways? Of course they would! The same is true of energy-efficient homes, whose builders can earn tax credits from $2,000 to $4,000 for many of the homes they build. Remodelers of historic buildings can take advantage of a long list of tax credits and other benefits, in some cases getting the taxpayers to pay for half or more of the entire project.
Worst of all, many of these tax credits are still transferable, which means they can be bought and sold by businesses in entirely unrelated fields. Few of them carry any requirement to show that they actually created jobs.