For years citizen-activists have worked to keep their state governments’ honest and their budgets’ balanced. Yet state governments have been using accounting tricks and giveaways to special interests to expand their debt and hide it from the public, setting the stage for tax increases that stifle innovation. Taxpayers need to know the true total of these hidden debts, and legislators need to ensure their states’ tax codes encourage growth.
FINANCIAL TRANSPARENCY: States loan or guarantee tens of billions of dollars every year, but almost all that debt is “off-the-books,” and is treated as a free lunch by state legislators and budgeters. By ensuring states use private sector accounting standards when lending or guaranteeing debt and incorporates these estimates in their budgets, states become better stewards of the public’s money.
CORPORATE TAX REFORM: States received hundreds of billions of dollars of stimulus money, but the federal government restricted their ability to return most of it to taxpayers. Congress did, however, give states the option to change their corporate tax codes in ways that conform to the 2017 Tax Cuts and Jobs Act. States should use federal stimulus money to conform state taxes codes to the pro-business federal tax changes enacted in 2017, allowing more expensing of new equipment and encouraging investment in new buildings, leading to more jobs and more business activity in the state.
RETURNING STIMULUS TO TAXPAYERS: Local cities and counties will receive $130 billion in almost unrestricted stimulus funding from the federal government. Yet most cities and counties, funded largely by property taxes, had bumper tax years in 2020 and afterwards, and there is no need for further stimulus. Local governments should include the billions in stimulus funding in their annual calculations for property and sales tax rates. Thus, if they want to spend more than usual, they can ask their voters. If not, the stimulus money will be returned as tax refunds.