| Posted: Tuesday, June 23rd, 2009 | Comments (0)

In the Name of Economic Development

By: Jason Murphey

One of the types of bills I am most disappointed to see appear on the floor of the House is a bill that makes a seemingly small but expansive change in the way an incentive program or tax credit give away is allotted to some special interest somewhere. I believe that most legislators have no clue about the identity of the special interest or group that is set to benefit from the change but are simply asked to support the bill in the name of economic development.

Over the past few years any number of programs have popped up that give away your money to any number of entities that will benefit from the special consideration of one of these incentive programs. The programs are usually created in the name of economic development which means it is very hard for most legislators to vote against them and run the risk of being seen as anti-growth.

Now, these programs appear to be slowly expanding to include more and more special interests. These groups are no doubt willing to invest in the lobbyists and build relationships with legislators in order to be successful in expanding these programs to include themselves.

I feel that Oklahoma's elected officials are putting us on a dangerous road down a path where anyone who can afford a high price lobbyist can create a special program that provides their specific interest with financial gain at the expense of the average taxpayers who are unknowingly forced to carry the burden of paying for these pay outs.

These programs essentially bypass the people's right as customers in the free market to determine who the winners and losers of the business world are and risks placing government bureaucrats and centralized planners in the position of determining who will benefit from the special programs.

And, with a lack of public transparency it seems there are a multitude of possible abuses that can occur as millions of dollars of tax credits appear to be distributed with little to no public awareness of who is receiving these credits and how they are being used.

I have always felt that in order for Oklahoma to compete with neighboring states such as Texas for economic growth it is important that many of Oklahoma's growth punitive taxes such as the personal income tax or the tax on capital gains should be greatly reduced or eliminated.

Unfortunately, as special interests are allowed to build holes into the tax code to provided targeted benefits in the name of economic development the harder it will become for Oklahoma to enact comprehensive tax reform. This is because a large and powerful constituency will be developed in order to maintain the big government status-quo and keep the targeted incentives in place.

A recently released report from the Tax Foundation demonstrates what is at stake. In their annual rankings the Foundation declared Oklahoma to have moved up to having the 19th highest tax burden in the United States. Oklahoma's tax burden ranking has steadily increased over the past 30 years. In 1977 Oklahoma ranked 42nd in terms of the level of state and local taxation. Now we rank 19th.
This high level of taxation does not provide incentive for growth. This is no doubt partly why Oklahoma's per capita income is one of the lowest in the nation. Despite all of good intentions of those who wish to grow our state by offering massive incentive programs, I believe that Oklahoma will grow much more successfully if we reverse course and follow a path of less taxation.

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