Recently, Colorado enacted SB 11-184 which includes a requirement for a specific tax expenditure report. This legislation provides that by 1/1/13, and every odd-year thereafter, the Department of Revenue is to prepare a "tax profile and expenditure report" that includes
- the legal reference for the tax expenditure
- when enacted
- revenue effect for most recent four years
- for income tax expenditures, the effect by income classes
In addition, after 2011, any proposal for a new tax expenditure or to extend an expiring one must "include a legislative declaration stating the intended purpose of the tax expenditure."
While better than just providing the "cost" of the tax expenditures which is what is done now, the additional information will be better. But for greater transparency and accountability, it would be best to do what a company would do to see if resources devoted to a project are panning out. A company would (should) identify the goals for the project and appropriate assessment measures based on those goals.
For a state creating a new jobs credit to increase employment, the legislature should also mandate that the appropriate state agency gather data on changes in jobs among different industries and probably something about those jobs. For example, did they end up with more part-time jobs at minimum wage, or ones requiring a college degree? Without identifying the goals and measurable objectives, Colorado might not get as useful information that they are looking for.
What do you think?