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The Owl's take.
We have now learned state officials caving in to the very venture capital companies abusing this program have
successfully blocked allowing the public access to tax credit information in any form. The very information the
author of the bill was seeking to force transparency.
The justification for this action is a misrepresentation of the Taxpayer Transparency Act, which state officials
including the governor were quick to embrace.
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Note: The act requires information be made available on the venture capital companies and the programs,
not the actual investors the program is designed to attract.
SECTION 2. AMENDATORY 68 O.S. 2001, Section 205, as last amended by Section 1, Chapter 281, O.S.L. 2006 (68 O.S. Supp. 2006, Section 205), is amended to read as follows:
Section 205. C.
27. The disclosure of information, as prescribed by this paragraph, which is related to the proposed or actual usage of tax credits pursuant to Section 2357.7 of this title, the Small Business Capital Formation Incentive Act or the Rural Venture Capital Formation Incentive Act. Unless the context clearly requires otherwise, the terms used in this paragraph shall have the same meaning as defined by Section 2357.7, 2357.61 or 2357.72 of this title. The disclosure of information authorized by this paragraph shall include:
a. the legal name of any qualified venture capital company, qualified small business capital company, or qualified rural small business capital company,
b. the identity or legal name of any person or entity that is a shareholder or partner of a qualified venture capital company, qualified small business capital company, or qualified rural small business capital company,
c. the identity or legal name of any Oklahoma business venture, Oklahoma small business venture, or Oklahoma rural small business venture in which a qualified investment has been made by a capital company, or
d. the amount of funds invested in a qualified venture capital company, the amount of qualified investments in a qualified small business capital company or qualified rural small business capital company and the amount of investments made by a qualified venture capital company, qualified small business capital company, or qualified rural small business capital company; or
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Bill aims to shed light on businesses' tax breaks in Okla.
Journal Record (The Oklahoma City), Jun 5, 2007
Janice Francis-Smith
In an attempt to make government more accountable for taxpayer dollars, the Oklahoma Legislature went too far by putting private
tax information on display, according to leaders of The State Chamber.
But the author of Senate Bill 1 said the pro-business group just wants to keep secret the huge tax credits enjoyed by certain
well- connected, big businesses.
As early as last fall, state Sen. Randy Brogdon, R-Owasso, had announced his intent to file a Taxpayer Transparency Act for the
2007 legislative session. Patterned after a federal bill supported by Oklahoma's U.S. Sen. Tom Coburn, Brogdon's SB 1 would
create an online database Oklahoma citizens could use to find out how their tax dollars are being spent. The idea was
endorsed by Gov. Brad Henry in his State of the State Address in February, and the bill received bipartisan support in the Legislature.
Though SB 1 was consistently approved with broad support from lawmakers at every step along the legislative process, the wording of
the bill was tweaked over and over until the final version of the bill was produced from a conference committee the last week of session.
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The Owl's take.
For the record that last minute tweaking of a previous bill was the same method used to sneak the loopholes in without
notice that faciliated this tax credit abuse Sen. Brogdon is trying to illuminate.
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Brogdon said he had never heard a word of criticism of the bill until Monday, when he arrived at the Capitol to find that the
president and CEO of The State Chamber, Richard Rush, had written a letter to Gov. Brad Henry urging the governor to veto SB 1.
Brogdon said a friend of his at the chamber made him aware the letter existed.
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"Sometimes in the zeal of passing what is perceived to be good legislation, our legislators get carried away,"
reads the letter from Rush. "The goal of SB 1 is fine. The inclusion of tax credits is a bad idea. Please veto SB 1.
Let the legislature try again next year."
Mike Seney, senior vice president of operations for The State Chamber, said the problem with the bill is it does not simply
require the reporting not only of state expenditures, but requires tax credits deducted from individual and corporate income
taxes to be posted online as well. Reporting of state appropriations is one thing; requiring businesses to share critical
information from their tax return information is another, he said.
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The Owl's take.
Aw? The diversionary tactic. There is much more the public to see and know to understand the use of tax credits than the State Chamber
wants to discuss. Obviously the State Chamber is best served by an uninformed public.
When it is the public's money the public's right trumps the recepient of the money. The recepient has the option of not participating.
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In Rush's letter to the governor, he said the requirement will harm the state's economy.
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The Owl's take.
"Will harm (or hurt) the state's economy".
Harm or hurt? Whichever fits their position, is the best and only reason these folks can come up with for every issue, over
the last 30, 40, 50 years? Or, would that be century?
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"Tax credits are critically important incentives to attracting investment into Oklahoma," wrote Rush. "They range
from 'new jobs credits' to 'small business capital credits' to 'agricultural producers credits' to 'venture capital investment credits'
and the list goes on. SB 1 will shine an unwanted light on those who invest in Oklahoma, and it will make it much more difficult
to attract those investors."
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The Owl's take.
"make it much more difficult to attract those investors"?
Quite the contrary! Any trouble would be trying to hold back a run on the opportunity!
This is a program that will return an investor $2 for every $1 they invest, with all risks eliminated by a state guarantee.
There is no other legitimate investment opportunity anyplace in the United States and probably the world that guarantees that
kind of risk free return on investment with the backing of an solvent state treasury.
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Rush questioned if everyone who claims a tax credit in Oklahoma will be required to file their tax return electronically and will have
their name reported on the Taxpayer Transparency Web site.
"Obviously Mr. Rush or the other ones concerned about the bill have not scrutinized the bill strongly enough," said Brogdon.
"Nothing in this act shall require the disclosure of information which is required confidential by state or federal law," reads Section One H of SB 1. The bill does require that "all recipients of tax credits, as that term is defined herein, shall file their reports or returns claiming the tax credits in an electronic format."
Tax credits are defined by the bill as "a credit pursuant to the Oklahoma Income Tax Act against tax liability which is taken by a taxpayer," excluding tax credits designated in other sections of state law that are extended for part-year residents, members of the Armed Forces, child care expenses, property damaged by a tornado and the Oklahoma Earned Income Tax Credit.
The bill requires the Web site report the name of the taxpayer receiving the credit, the amount of the credit, and the specific provision under which a credit has been granted.
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"This legislation is designed for the very thing that The State Chamber is complaining about," said Brogdon. "The special
tax credits, the hundreds of millions of dollars we give out each year to big business, it will expose that. It will shine a light on it,
and I can see now why he's concerned about it."
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Brogdon questioned why no one from The State Chamber had objected to the provisions of the bill before it reached it the governor's desk. Seney said the language of the bill had changed considerably from the time the bill was introduced, but Brogdon said both the original version of SB 1 and the version sent to the governor's desk included the reporting of tax credits. The original version of SB 1 requires the state Web site to report all "tax refunds, rebates or credits."
Even if the intent of the bill is to exclude private taxpayer information, the wording of the bill does not accomplish that aim, said Seney. The wording of SB 1 is so unclear, the measure will create problems that may have to be resolved by the courts if Henry signs the bill, he said.
Under the provisions of SB 1, there are no clear barriers on what tax information may be considered private for a business that, for instance, claims a tax credit for providing Hepatitis A vaccinations to their employees, he said.
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The Owl's take.
Grasping for trivia to divert people from the bigger issues.
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"Every tax credit we've got in this state has been approved by the Legislature and signed by the governor," said Seney. "Those tax credits are there for a reason. They are there to grow business in this state. If it's my tax return, I don't need people knowing what that is. If the state believes that it's a valid tax credit, that should be the end of it. If they think that there's a problem with it, then maybe they should end that tax credit. I mean, why don't we require that people report how much they've given to charity? That's a deductible amount off of my taxes."
There isn't much difference between the tax credits offered to businesses and any other business deduction, he said, and businesses
have a right to privacy regarding their tax returns. Seney also noted that the bill endorsed by U.S. Sen. Coburn on the federal level
does not require the reporting of tax credits, but limits the reporting requirement to the government's expenditures of actual of tax
dollars collected. If the state bill focused solely on government expenditures, the measure would not have been opposed by the chamber,
he said.
Brogdon said he isn't worried about Henry signing SB 1 - the governor has supported the idea since it was introduced, he said.
But Henry was noncommittal about SB 1 on Monday, adding that he is considering input from all parties involved in the issue.
"We want to be careful with any legislation that we pass that there are not unintended consequences," said Henry.
Though Henry said he supports the concept of SB 1, he and his staff are scrutinizing the language of the bill to make sure
the measure would not harm economic development efforts in Oklahoma.
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