Tax credits are the sneaky twin of government appropriation. Sometimes, when the prospect of attaining direct government funding of your special interest is simply too daunting, tax credits offer an easier route to accomplish the same goal. If direct spending is "pork", tax credits are "sausage" - kind of the same thing, but more highly processed, and more likely to include snouts and anuses.
According to the Star this morning, there are currently 61 different tax credit programs in the state of Missouri. They are administered by the
Missouri Development Finance Board, and their "counsel" is
Gilmore & Bell, a law firm specializing in transferring public dollars to private pockets though tax incentive deals and bonds (or, as they phrase it, "one of the leading public finance law firms in the United States"). Gilmore & Bell's website brags about how many public dollar giveaways it worked on in 2008 - just under five
billion dollars nationwide.
If you're looking for the heart of darkness for governmental spending, you've found it.
The funny thing is, this secretive little back room has flourished for years, because it has no natural enemies. Democrats tend to support it because much of the money goes to big projects in the urban areas. Republicans tend to support it because most of the money goes to insanely wealthy insiders who know how to work the system - country club Republicans and development lawyers. It's a rare opportunity to toss money around without supporting increased government spending, and appearing to actually be reducing taxation.
It's even shadier than that, though. There is actually a market for these tax credits, and they get sold to the wealthiest entities in the state, at a discount. If I get a million dollar tax credit, but I don't pay much in taxes because I don't earn much, I can sell that million dollar credit to a multi-millionaire for $850,000. The millionaire gets a million off his taxes for only $850,000, and I get $850,000, while the taxpayers get the shaft.
To Gilmore & Bell and the Missouri Development Finance Board, that's a victory to brag about on your website. For the taxpayers, though, that's a million dollars that needs to come from somebody else's pocket.
Of course, with this much money being tossed around, there are puppets who can be counted upon to stand up for the status quo.
Ironically, the loudest defense of tax credits is based upon the fact that they accomplish much good. Indeed, that is absolutely true. Not even a secretive board sequestered in a back room in Jefferson City can spend millions upon millions of dollars without accomplishing some good. Spending money makes people happy.
But, if the money spent is so darned wonderful, what's the problem with dragging the process into the light? The proponents of change want to set caps on how much money the Missouri Development Finance Board can give away from our treasury without approval - can anyone seriously argue there should be no limits? They also want to treat the tax credits like appropriations - and they are exactly like appropriations, only shadier, so I agree with that point as well.
When you hear the wonderful accomplishments of tax credits, and how many jobs they have created and how much investment they have spurred, congratulate the defenders of the status quo on their achievements.
But ask them why, if everything they are doing is so darned positive, they fear more accountability?
Labels: republicans, tax credits, tax policy