Testimony: Tax Breaks/Tax Cut Policy, (a summary of testimony given by Tom Laing on Mon. 2/8) Options

[Erin]

InterHab staff testified on Monday regarding House Concurrent Resolution 5028, which would establish a policy for legislative deliberations regarding tax breaks. The resolution would recommend a three-year moratorium on new tax breaks, and a thorough study of tax-cut policies which might guide future legislative deliberations. At issue is the dramatic increase in tax cut legislation, enacted and signed into law, in recent years. The Secretary of Revenue proposed this resolution in order to call into focus the effects of such tax cuts, i.e. the weakening of the State general Fund.

In his comments, Tom Laing said “When the subject of red-ink is raised, it is almost always blamed on expenditures for general government, public education, social services, etc. Everyone knows that is only half the story . This legislation spells out one way to address the other half of the story, i.e. by establishing a three year moratorium on the frequent and expensive legislation to cut taxes.”

InterHab’s testimony took aim at the disconnect in the legislative process between budgeting and taxation decisions, and at those entities which continue to come forward to ask for more tax relief, despite the current troubled status of the state’s finances. Laing said such a moratorium should not be needed. “Those who annually and successfully advocate for tax cuts should look at the budget needs of the State and the shortage of revenues, and establish restraints on their annual hunger. Sadly, a look at the tax committee calendars of the several recent sessions shows no such restraint. It is overdue that legislators restore order to this process.”

Noting that the resolution is a policy statement without binding effect, Laing suggested making the resolution into a one which would establish a new joint rule for the House and Senate for the current session.