What if every time you looked at your bank statement hundreds – or even thousands – of dollars were mysteriously missing and you had no idea where the money had gone? I think most Texans would want to get to the bottom of the issue. So why does state government allow this to happen with millions – even billions – of dollars every session?
That’s what I have been trying to find out for two years.
The Texas tax code is riddled with tax subsidies, giveaways and loopholes that were put in place years ago by special interests and have never even been reviewed. It is such a problem that, despite repeated requests to numerous agencies, no one at the state level could tell me how much we lose in tax breaks and targeted incentives because no one even knows how many are in the code, how much they cost or if they are even working!
All we know is that, at a minimum, Texas spends $43 billion annually on these incentives, but with almost no accountability or oversight. To many Texans, these so-called incentives are simply another way to game the system.
That’s why I’ve filed SB 140, legislation to determine all of the preferential tax breaks in the Texas law. State agencies are subjected to a “sunset review” every 12 years to determine if their functions need to be continued. The tax code would benefit from a similar periodic review of all its exemptions, exclusions and special treatments to answer one simple question: Are they working?
How big a problem is this? Texas gave retailers a tax break of more than $200 million in 2010 simply to file their sales tax on time. Do you get a break for filing your taxes on time? There’s even a loophole that allows private country clubs to skip out on millions of dollars of property taxes. Using the loophole, the state’s largest beneficiary, River Oaks Country Club, has a market value of $79 million but is assessed at only $4 million. The 2014-15 budget even includes nearly $40 million to subsidize Hollywood movies.
The truth is, as a result of the sunset process, we know more about every penny spent by Texas Board of Architectural Examiners, The Texas Commission on the Arts and the Texas Department of Criminal Justice’s Windham School District than we do about the Texas tax code. Further, this legislative session there are nearly 100 bills on the cusp of becoming law that mandate thorough studies of such issues as the prohibition of dairy farming in certain areas of the state or requiring research papers to be available to the public.
Why don’t we subject our tax code to the same scrutiny? Apparently, those in charge would rather continue to hemorrhage money through wasteful tax subsidies than even attempt a full accounting of what we pay out in tax breaks and to whom.
Now, opponents of knowing how much we give away in tax loopholes constantly argue “businesses need certainty” when it comes to the tax code. Well, there is one sure-fire way to be “certain”: Don’t take the money.
I, for one, do not believe the only reason big Texas businesses can compete and create jobs is due to state subsidies. Opponents of tax code scrutiny won’t tell you that there is no such thing as “certainty” in the Legislature. Every session, the Legislature could repeal every single tax break if it so chose. In addition, every single public school, state agency and program has to come back every two years and fight for every needed penny. Why should tax subsidies be treated like entitled royalty, especially when we have still not fully restored last session’s cuts to our children’s schools and done absolutely nothing to expand health insurance access to 1.5 million uninsured Texans?
We need better accountability measures, checks and balances on corporate welfare and tax giveaways just like every other government program to prevent wasteful spending in these tough economic times. It’s time for Texas to step forward, shine the light on inefficient and expensive tax loopholes, and make real reforms to ensure taxpayer funds are protected and wisely invested.
Ellis, a Democrat, represents Houston in the state Senate and is chairman of the Senate Committee on Open Government.