Maryland taxpayers are subsidizing about $3.7 billion worth of tax giveaways every year for businesses and industries.
At least that’s what state budget analysts think. But no one is really sure because the state isn’t sure how much 157 of these giveaways cost.
Whatever they cost, are they worth it? Well, nobody really knows that either because there isn’t much information available about the impact of many of these programs.
“It is, in some sense, surprising how little data is available on a whole lot of things,” David Roose, director of the comptroller’s Bureau of Revenue Estimates, which monitors most of Maryland’s tax breaks, told The Daily Record’s Nicholas Sohr.
This much we do know: The tax giveaways are “the ultimate trophy for corporate lobbyists,” says Greg LeRoy, executive director of Good Jobs First, a Washington nonprofit that analyzes state economic development incentives.
“Tax expenditures have become a lot more popular because corporate lobbyists have figured out [tax expenditures] are easier ways to get subsidies from the taxpayers,” LeRoy explained. “They kick the can down the road in terms of the harm they do to the budget. The costs associated with them fall on the next governor, the next legislature.”
Some legislators tried to do something about this problem last session but failed.
“The sentiment is that the tax code is too riddled with holes and favors for special interests,” said Del. Bill Frick, a Montgomery County Democrat who has pressed for more oversight and accountability for tax preferences.
Mr. Frick sponsored legislation that would have required regular reviews of 29 tax credits and would have set five-year expiration dates for those credits unless lawmakers voted to extend them.
His bill passed the House but was killed 10-2 in the Senate Budget and Taxation Committee on the last day of the session.
Mr. Frick promises to push for reform legislation again in 2012. This time, the General Assembly needs to take some meaningful action.
We are not saying that all of these tax breaks should be eliminated. Many may be making significant contributions to the economy. The point is that in most cases, we simply don’t know.
“Reasonable people may disagree about the value of a program,” said LeRoy. “But if you don’t have good information about the costs, it’s impossible to compare them to the value.”
Neil Bergsman, a former state budget analyst and now the director of the Maryland Budget and Tax Policy Institute, says Maryland needs more data to determine which tax breaks to cut, which to keep, and which to keep the public informed of.
“I don’t think big, multistate corporations can feel shame, but we should make it public information and see if they can be shamed,” said Bergsman.
He’s right. The state needs to collect and publicize as much data as possible about these tax breaks so elected officials can make informed decisions about which of them are worth keeping.
Shame on all of us if they don’t.