Del. David Englin, D-Alexandria, has submitted a bill that would require any new legislation establishing or increasing tax loopholes (credits, exemptions, deductions, etc.) to expire within five years.
Tax expenditures, as I have long argued, are out of control at both the federal and state level. Englin’s bill represents a modest step to reining in this monster. The delegate clearly understands the issues at stake, and I wish only that he had gone further.
Tax expenditures, he writes in today’s Times-Dispatch, deprive the state of $12.5 billion in annual revenue (2008 figures). Eliminating the loopholes would free up resources to reduce tax rates (my preference) or boost spending in critical areas. A majority of the tax expenditures run on auto-pilot with little or no legislative oversight.
Englin has personally resolved not to vote for a tax preference unless it includes a sunset date and “a requirement that the Department of Taxation report the intent of the policy and how much revenue it cost” — information legislators need in order to weigh costs and benefits. He should make that second requirement the subject of a second bill, and he should apply it to all tax preferences, not just new ones.
— JAB