April 13, 2006

Repealing Tax Breaks for Spanish American War Vets

Yesterday, in a tongue-in-cheek explanation of why periodic sunsetting of state tax breaks is unnecessary given the diligence of today's omniscient, always-questioning state lawmakers, I cited South Carolina lawmakers' successful effort last year to repeal property tax exemptions for veterans of the Spanish-American war.

Turns out not everyone has been so successful. Wyoming lawmakers failed in an effort to modernize their veteran-related property tax exemptions this year. As a result, special property tax breaks are still on the books for "An honorably discharged veteran of the Indian Wars, Spanish American War, Filipino insurrection, Boxer rebellion, Puerto Rico campaign or First World War."

I'm trivializing a serious problem with this example, of course. Since every veteran of the "Indian Wars" is long dead, it matters not at all whether this tax break stays on the books. But there are plenty of tax breaks that really do drain public resources over the long haul that should be scrutinized more regularly. Publishing a regular, detailed tax expenditure report is the first and best approach to achieving this level of scrutiny.

Automatic sunsets, of the sort that Washington State has just enacted, are a step beyond this, and could create problems of their own-- mostly in that the volume of decision-making by lawmakers could increase dramatically, depending on how frequently the sunsets were done. The best tax expenditure reports (like Oregon's) give pro-and-con arguments for each tax break, along with an estimate of how much it costs, and actually weigh in on whether the tax break is achieving its purpose. This is the sort of thing that a properly funded state revenue department should be able to accomplish on its own. It's certainly less burdensome than Washington's sunset clause; the likely tradeoff is that it's also less effective in getting rid of useless tax breaks.


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