Friday, October 4, 2013

In case you wondered: “State Tax Expenditure”

Over the years, we’ve been flabbergasted by the proclivity of our ‘public servants’ for referring to those things excluded from taxation as ‘tax expenditures.’

The foundational principle, of course, is that EVERYTHING should be subject to taxation, WITHOUT EXCLUSION, and that government needs come first, others’ come second, and yours come third.

Therefore, we often hear our elected betters say “we can’t afford these tax expenditures,” which a sensible person might interpret as the cost of a government program.

Studio audience says XXXXX!  Wrong!!!!

Our benefactors in the ruling aristocracy mean just the opposite; they consider a ‘tax expenditure’ to be any amount that they assumed they should collect from us as a matter of course, but which has been snatched from their grasp by a specific passage in tax law.  Which they passed, oddly enough, and almost always in response to lobbying pressure (plus who knows what goodies) from special interests.

When you hear the term ‘loophole,’ or ‘tax breaks,’ you should always assume that the subject is a consequence of tax law  passed by the geniuses who govern our lives.  And for most of them, they mean the deductions you take, like mortgage interest, charitable donations, property tax payments, medical expenses, etc.  These are, in the current day vernacular of big government, ‘loopholes.’

Which makes you all sneaky, conniving, calculating, law-abiding tax cheats.

Never, though, had we realized that the concept of “tax expenditure” had been memorialized in statute.   We were wrong.

As we’ve often said, the older we get, the more naïve we realize we are.  So here for your reading pleasure, if you don’t otherwise have a life, is this document:

The key passage is this, which makes it very clear EXACTLY what a ‘tax expenditure’ is in formal legislative terms:

I. Introduction

State law requires Maine Revenue Services to provide two tax expenditure reports in January of every odd-numbered year. The first report must be included in the state budget document.
5 M.R.S.A. §1664 provides that the document specifically include

. . . the estimated loss in revenue during the last completed fiscal year and the fiscal year in progress, and the anticipated loss in revenue for each fiscal year of the ensuing biennium, caused by the tax expenditures provided in Maine statutes;

the term "tax expenditures" means those State tax revenue losses attributable to provisions of Maine tax laws which allow a special exclusion, exemption or deduction or which provide a specific credit, a preferential rate of tax or a deferral of tax liability.

Wow; you could take this language and jump all over TIFs, MRRA ‘development initiatives,’ Amtrak, and any number of other things, including non-profit organization tax exemptions.  Like Bowdoin College, for example.

As an acquaintance pointed out elsewhere, the passage above is the secret behind being able to claim “I didn’t raise any taxes,” while increasing tax revenues substantially.

He said this:

That is how they hijacked non-resident private airplane pilots, who landed in the state with a plane bought elsewhere, with sales aka 'use' taxes; meals taxes on the elderly in assisted living homes and on restaurants who gave food to their employees for free; and a variety of "lodging taxes" for previously exempt "casual" vacation rentals and on realtors and others who were not renting but who were "estimated" to owe taxes on non-existent rentals. They rationalize the brutal shakedowns with the mentality that you owe them whatever they demand and don't you dare question it.

Perhaps you could get Johnny Protocols to explain the finer points of this subterfuge, since his years in power in Augusta have given him a finely honed ability to prove that up is down, and black is white.  It’s why his explanation that BDC money given to Brunswick Taxi is not public money has been so convincing.

Not to mention his statements on what happened to the dozen or more Fortune 500 companies that were beating his door down to come to Brunswick’s one of a kind plot of land.

Thank goodness we have such dedicated public servants, acting with our interests in mind, enforcing carefully crafted law.

Who knows where we’d be if this was not the case.

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