February 25, 2011 09:52 PM UTC

"Common Sense Accounting" Giving Republicans Heartburn?

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• by: Colorado Pols

Today’s main event in the House Finance Committee is a very interesting bill that could, if passed, provide a great deal of information about where–and how effectively–Colorado tax dollars are directed. House Bill 1104 would require the Department of Revenue to draw up an annual report on how much money is being “expended” in the form of tax credits and exemptions, and what industries are claiming them.

The Colorado Fiscal Policy Institute summarizes the problem this way:

Despite a $1 billion budget deficit, Colorado gives away more than $2 billion annually in unevaluated and unaccountable tax expenditures. Requiring the Department of Revenue to complete a tax expenditure report promotes efficiency and effectiveness in the Colorado tax code, and improves transparency and accountability for Colorado taxpayers.

Tax credits, deductions and exemptions (collectively known as “tax expenditures”) are a form government spending and should be treated just likeany other apportionment of government income. Just as direct government spending is audited and reviewed, tax benefits provided by the state shouldundergo evaluation and scrutiny to ensure the efficient and effective achievement of targeted goals. Up to now, Colorado’s tax expenditures have been unaccountable and unevaluated by Colorado lawmakers and taxpayers. That is why it is time that Colorado joins 30 other states and implements tax expenditure reporting.

Tax expenditures make up more than one-fifth of all government spending, yet that spending has never been subjected to any public level of accountability or review. Colorado taxpayers don’t know if one business or industry is being favored over another. They don’t know if one income group benefits more than another.

What we’ve heard is that Rep. Brian DelGrosso, chair of the House Finance Committee, is a little nervous about opposing this bill, but even more nervous about what might happen if it passes. A sober look at how much revenue is lost to the bevy of (no doubt) well-intentioned tax credits and exemptions the state has carved out over the years for various purposes, might raise really simple and straightforward questions from the voting public about who is benefiting.

And if you’re a dogmatic taxes-are-evil Republican with the “Tea Party” breathing down your neck at every turn, you really can’t have that. At the same time, how defensible is the idea that the state should not even know how much money is being left on the table?