Great GASB! Common Cause Backs Proposed Rules to Disclose Cost of State and Local Corporate Tax Breaks;
- Dale Eisman
Urges Accounting Board to Make Them Stronger
Common Cause joined today in calls for an overhaul of outdated and incomplete government accounting practices that hide the true cost of billions of dollars in tax breaks granted to corporations by state and local governments every year.
The nonpartisan government watchdog organization filed formal comments with the Government Accounting Standards Board (GASB), strongly supporting new disclosure standards the board has proposed to give citizens a more complete picture of the price-tag for tax breaks awarded in the name of economic development.
The Common Cause letter also includes suggestions for a number of changes to strengthen the board’s draft.
“In their zeal to promote development and job growth, state and local governments are providing a staggering assortment of special tax abatements, credits, deductions and exemptions to businesses that agree to expand or relocate factories, offices and other facilities,” said Arn Pearson, Common Cause’s vice president for policy and litigation.
“All too often, there is little if any accounting of how those tax breaks reverberate through government budgets, pushing policymakers to cut funding to public schools, health, safety and public service programs and/or increase real estate, sales and individual income taxes.
“It’s a race to the bottom that shifts costs onto the rest of us and creates a false sense of fiscal crisis,” Pearson said.
“And at the end of the day, we simply have no way of knowing if the benefits of economic growth supposedly obtained through these tax giveaways outweigh their costs.”
GASB, a professional organization that writes the accounting standards used by most states and localities, is in the process of developing standards for how governments should track and account for the tax breaks, sometimes called “tax abatements” or “tax expenditures.”
Common Cause joined with Good Jobs First and dozens of other public-interest groups and elected officials in filing comments in support of the proposed standards. “The higher the financial stakes in public decisions, the greater the need for complete information and transparency,” the Common Cause submission argues. “Economic and community development decisions shift an estimated $70 billion annually in state and local tax revenues. With so much money in play, conflicts of interest, corruption and the appearance of corruption – and plain old inefficiency – are bound to thrive so long as critical information is kept in the hands of a privileged few.”
The letter also notes that, “with longstanding bans on corporate and union political spending lifted, those seeking to gain from tax breaks and subsidies have become increasingly significant political spenders.” All that spending “poses a heightened risk of pay-to-play transactions and conflicts of interest that, left unaddressed, threatens the integrity of economic development policy decisions and the fiscal stability of state and local governments,” it asserts.