What This Would Do: Amend Chapter 62C of the General Laws to require public disclosure of the results of refundable or transferable tax credit programs, including the identity of the corporation receiving the credit and the employment data to show how many jobs the credit allowed the company to create. This would NOT require the release of tax information from individuals, only corporation.
Why This Matters:
- You can’t manage what you can’t measure. Requiring tax credit transparency will increase the amount of information that legislators have about the way public funds, in the form of tax credits, are being spent. It will also promote greater accountability, by allowing the Legislature to compare the amount spent on a specific tax credit with the number of jobs that credit created.
- Many tax credits – including the historic preservation and film industry tax credits – are refundable or transferable, essentially acting as a state grant. But unlike typical grant programs, details about tax credits are considered private. In other words, companies receiving tax credits are treated differently than companies receiving state grants.
- In this time of massive budget cuts, we need to examine where every single public dollar is going, and what impact it is having. This measure would provide us with the information we need to be good stewards of the public’s money, and provide a measure of accountability as to the cost effectiveness of tax credits.
- The ability to see how our government uses ALL public funds is fundamental to democracy. Increasing budget transparency promotes efficiency, discourages waste and provides a check on corruption.
- Numerous other states currently require some form of tax credit transparency. It is only fair to expect that businesses utilizing these specific tax grants for public purposes be asked to show the results of the taxpayer dollars they have received, which is exactly what the tax credit transparency provision is intended to do.
Tax Credit Transparency: Recent History
- The original FY09 House and Senate Ways & Means budgets, along with the Governor’s original FY09 budget, all included a provision to provide greater tax credit transparency.
- Unfortunately, the budget that eventually emerged from the conference committee changed the transparency provisions in such a way as to remove some critical reporting details. The omission of this important information – such as the identity of the company receiving the credit – makes it virtually impossible for the state or the public to determine the effectiveness of these tax credit programs.
- For FY10, the Legislature should adopt a provision to increase transparency in our budgeting process and promote accountability in public spending on tax credits.