A bill to end the practice of allowing recipients of tax credits to sell them to someone else failed to pass a subcommittee in the Oklahoma House Thursday, but the issue is far from dead for this session. Representative David Dank (R-Oklahoma City) was the author of House Bill 2979 and has made tax credit reform his mission this session. He says while that bill is dead, there are still two other bills making their way through the process which would accomplish the same thing. But he knows there are very powerful interests aligned against the idea – interests he called “forces of evil” during the House A&B subcommittee on Revenue and Taxation meeting. He later backtracked, saying they weren’t evil, he just disagreed with them on this issue (see first video below).
Dank says it’s “horrible public policy” to give one company a tax credit and allow them to sell it for 80-cents on the dollar to another company that had nothing to do with the project that warranted the tax credit. According to Dank, one of the industries selling the most tax credits is wind power which is building wind farms in the western part of the state. He says those companies are “wanting something for nothing” and that the legislature has been turned into “a constitutionally created body of Santa Clauses. We give away the taxpayers’ money and delight in doing it.” He says wind farms would be built in western Oklahoma without transferable tax credits because the area is prime for wind generation. He also questions exactly how many jobs wind farms create after the construction phase.
But for Rep. Mike Jackson (R-Enid), the idea of eliminating transferability is the wrong way to go. He calls transferable tax credits “an economic development tool” that brings jobs into the state (see second video below). Jackson says more wind farms are coming to Garfield County in his district and transferable tax credits are one reason for that. He doesn’t deny that some changes need to be made to the process.
One idea brought up during the subcommittee meeting was only allowing transferable tax credits to be used against income tax liabilities. According to Dank, a major buyer of tax credits is the insurance industry which uses them to offset what they owe in insurance premium taxes. Dank says that ends up hurting the state’s pensions since the firefighter’s pension system is funded in part by the premium tax. Jackson says he would agree to a plan that prevented tax credits from being sold and used to offset anything other than income taxes. He also supports the idea of prohibiting the sale of tax credits more than once.
Both Dank and Jackson agree that the current system of transferable tax credits will be reformed in some way this session. Dank admits that elimination of transferable tax credits is not likely “but at least we’ve started a conversation.”