Oregon Governor Signs Transparency Bill for Economic Development Tax Breaks

Oregon Governor Kitzhaber has signed a bill that would require more transparency on tax breaks designed to promote economic development. The bill requires disclosure of the value of tax breaks. In addition

The new law requires reports to be posted to the website [www.oregon.gov/transparency] which will contain the name and address of the business receiving tax breaks, an explanation of why the tax incentive was granted, and whether the recipient met the outcomes expected by the various programs.

Tax breaks like this often receive little oversight. But policy experts often complain that many of these highly specialized tax breaks bear more resemblance to government spending than they do to tax cuts, and they can cost states hundreds of millions of dollars every year. These tax breaks, known as tax expenditures, are available only to specific taxpayers who engage in certain activities, and in many cases are awarded at the discretion of a government agency. All else equal, a tax code littered with tax expenditures requires higher taxes elsewhere or lower spending to compensate for the revenue loss.

Tax expenditure transparency is good. Taxpayers need to know who is getting special treatment and whether these breaks are worth the cost. But states should not stop there. Tax expenditures need to be studied to determine if they are achieving their stated goals. Ultimately, the evidence has shown that economic development tax incentives are not nearly as effective as policymakers hope (or pretend).

Read more on state tax expenditure transparency.