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Trying to Eliminate Tax Credits

Filed by Michael Cross in Feature, Local News, News, Politics.
January 16, 2013

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As Congress deals with the issue of the deficit, leaders are talking about increasing revenue along with cutting spending.

One issue congressional Republicans are pitching is to increase revenue by cutting out tax loopholes which help lower the tax burden of some businesses.

But, Oklahoma Republicans found out last year that’s a process which is easier said than done.

Cutting out loopholes and tax credits for Oklahoma businesses was a big part of state Republicans’ plan to deal with the tax code last year, even getting a mention by Governor Fallin in her State of the State address to kick off the 2012 legislative session.

“How do we pay for a tax cut? Under the Oklahoma Tax Reduction and Simplification Act we’ll do it in three ways: first, by eliminating tax loopholes, carve outs and other exceptions.”

The plan was to eliminate credits for things like wind energy and energy efficient homes as well as eliminating transferable tax credits.

Representative David Dank put together the plan after studying the issue during the Interim and receiving support from lawmakers and state officials.

But, Dank says it’s hard to pass through the legislature when the lobbyists come to the Capitol.

“It is there’s no question about it. Hell, they got all the money, what do you expect? They give these people campaign contributions and now you can use campaign contributions for virtually everything. It’s like they’re a slush fund.”

And, the Oklahoma City Republican says since he’s introduced the idea to eliminate tax credits and loopholes for businesses the lobbyists have kept up the pressure.

“One group that we started looking at moved a PAC from Chicago down to Oklahoma in October of this last year and started passing out money, a lot of it to candidates who didn’t even have an opponent, so it’s just incredible what’s going on.”

The lobbyists say they’re just trying to protect the interests of the businesses they represent, but also the state itself.

Bobby Stem works as a lobbyist for retailers, trade associations and manufacturer.

He says when companies hear talk of cutting incentives, they start looking at other states.

“States that say we want your employees and your business here bad enough to incentivize you. In all honesty, what you have here is states want to put their people to work. And in order to do so, they will give a financial incentive.”

Stem says this is just how business is done in Oklahoma and the United States.

Industry lobbyists are working just as hard in Congress to make sure their tax credits are protected, making the job of eliminating them very difficult.

But, Oklahoma Representative James Lankford says being tough to accomplish can’t be an excuse.

“Congress deals with it the same way it has to be dealt with. You just have to man up and say I understand you really like this tax deduction I understand you really like the fact that it has been there for you, but we’re going to give you one year to shift your business model and really get into a different model.”

As the newly appointed Chairman of the Subcommittee               on Energy Policy, Health Care and Entitlements, Congressman Lankford expects to hear from several lobbyists who want to preserve their tax credits.

“There are plenty of people that can come and explain to you why their particular tax deduction is different then everyone else’s and that there’s really is needed while the others are not. I get that. There are a lot of folks who can come and explain that. The difficulty is we have a trillion dollars in deficit spending going on as a nation.”

But, Stem says every business is different, and across the board elimination of tax credits helps no one.

“You can’t say all tax credits gone. You can’t say no personal income tax, you can’t say absolutely no state debt. You know, these things sound very good in tea party brochures, but they have no place in reality.”

While arguments from lobbyists might not stop Congress looking into eliminating tax credits, it also won’t stop Representative Dank in trying to get back what he calls the people’s money.

“The people can determine how they want that spent. If we need to give it back to them in terms of tax relief we’ll do that. If it’s services that they demand we’ll do that, but we’ve got to quit giving away the taxpayer money.”

Representative Dank says lawmakers last year were able to see the elimination of many venture capital credits because they of sunset provisions.

He says he still plans to file the same bills which failed to get through the 2012 legislature.

Representative Dank says the economic tax credits he’s looking at eliminating comes to about $200 million of the state’s nearly seven billion dollar budget.

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