Over the past several months, we have blogged several times on state tax incentives, in particular on the need to strengthen transparency and evaluation of tax credit programs (see our posts here,  here, here and here). The issue  seems to be quickly gaining critical mass.  In September, a Joint Legislative Task Force chaired by Senator Mike Mazzei and Representative Jeff Hickman began examining transferable tax credits (the Task Force meets again November 5th in Tulsa). Earlier this month, Representative Mike Reynolds called for an investigation into possible abuses associated specifically with two transferable tax credit programs, the Small Business Capital Companies credit and the Rural Small Business Capital Companies credit.  The Oklahoman has taken note, arguing in this editorial that, “while we remain convinced that some incentive programs are justified, the potential for abuse makes the scrutiny vital and timely.”

One common argument for tax incentives is that in the competitive world of state economic development, states that fail to offer tax breaks to entice companies to invest or stay put will see investment and jobs shift elsewhere. Read the rest of this entry »