Special Briefing: State Tax Breaks

On this episode of Special Briefing, experts discuss the latest Volcker Alliance issue paper, Benefit or Burden: Evaluating $1 Trillion in State Tax Expenditures. The issue paper addresses how US states hand out massive tax breaks every year to advance policy goals, such as aiding low-income families, spurring business investment and job creation, or mirroring the federal tax code. Known broadly as tax expenditures, these exemptions, credits, abatements, and other measures reduce state revenues by an estimated $1 trillion a year, almost three times their 2021 total state expenditures on education. Such tax expenditures, which often suffer from lax government oversight, may be leaving states short on revenue at time when the effects of climate change and the cost of deferred maintenance means that they will need to spend more on infrastructure now and in the decades ahead. 

Our panel of experts includes one of the issue paper's authors, Matt Fabian, partner, Municipal Market Analytics; as well as Jonathan Ball, legislative fiscal analyst, State of Utah; Tim Bartik, senior economist, W.E. Upjohn Institute for Employment Research; and Arlene Martinez, deputy executive director, Good Jobs First. 

Notable Quotes: 

“We went into this project expecting a mess. It was much worse than that. We're not even advocating for true, actual public disclosure of the information. We just want states to get their arms around what it is they're doing.” - Matt Fabian 

“I would also make sure that before you massively fund tax breaks, that you fund infrastructure and job training which evidence suggests is more cost effective in creating jobs than some of these tax breaks. States need to fund more programs where community colleges will train workers for companies so they can make sure they have the labor and the real estate they need.” - Tim Bartik 

“I was a journalist for many years, reporting a lot on local spending and budgets, and I could see what would happen when communities were strapped for cash. The programs that often got cut were often programs that targeted low-income folks or vulnerable people, because they tended to have less of a voice in the process.” - Arlene Martinez. 

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The views expressed on this podcast are those of the panelists and do not necessarily reflect the position of the Volcker Alliance or Penn IUR.