Oklahoma is looking to cut tax expenditureTax expenditures are a departure from the “normal” tax code that lower the tax burden of individuals or businesses, through an exemption, deduction, credit, or preferential rate. Expenditures can result in significant revenue losses to the government and include provisions such as the earned income tax credit (EITC), child tax credit (CTC), deduction for employer health-care contributions, and tax-advantaged savings plans. s:
A bill that suspends more than two dozen tax creditA tax credit is a provision that reduces a taxpayer’s final tax bill, dollar-for-dollar. A tax credit differs from deductions and exemptions, which reduce taxable income, rather than the taxpayer’s tax bill directly. s for two years to help plug a $1.2 billion hole in the state budget has been signed into law by Oklahoma Gov. Brad Henry.
The deferred taxA tax is a mandatory payment or charge collected by local, state, and national governments from individuals or businesses to cover the costs of general government services, goods, and activities. credits include those for the restoring of historical buildings, certain job creation and the generation of wind power.
As states in bad fiscal shape look to balance their budgets, broadening tax baseThe tax base is the total amount of income, property, assets, consumption, transactions, or other economic activity subject to taxation by a tax authority. A narrow tax base is non-neutral and inefficient. A broad tax base reduces tax administration costs and allows more revenue to be raised at lower rates. s could be preferable to tax rate increases. There is some benefit in cutting distortionary tax expenditures. And broadening bases now can enable rate cuts in the future. One good thing to come out of the state fiscal mess is that some states have stopped to examine what they are getting for expensive tax expenditures.Share