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Quick – If You Have a Problem, Just Ask For a Tax Credit

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By Lowell L. Kalapa

Well, now that it seems the state has a few bucks to spare, lawmakers have slipped back into their old habits of just spending money to solve problems. If it isn’t out the front door, it is out the back door with tax credits.
The plethora of bills which propose tax credits for this and that boggles the mind. It seems that lawmakers think that a tax credit is the aspirin for all problems facing the state. The thought process seems to follow a path that if the state dangles a tax credit out there, taxpayers will be eager to jump at the opportunity to do whatever the state is offering the credit.
That seems to be the thought pattern in the adoption of the alternate energy tax credit more than 20 years ago. At that time, the alternate energy tax credit for solar water heating devices was adopted to compliment the federal tax incentive. Together, the two tax credits offered taxpayers a “50% off sale” if such devices were acquired and installed. After a few years, the federal government withdrew its tax incentive and local lawmakers decided to up the state’s offer to get people to put solar water heating panels on their roofs.
Altogether, the state alternate energy tax credit has been in existence for more than a quarter of a century, yet there are bills in the hopper this year that would extend the credit beyond its current sunset date of 2003 to the year 2010.
What the proponents don’t realize is that those who may want to make the conversion and possibly benefit from the credit can’t do so because they just can’t come up with the $3,000 to $4,000 it costs to buy one of these devices. Thus, the credit in its present form benefits only the well-off taxpayer who can come up with the money up front to make the purchase. For the poorer families of our community, they are out of luck.
Instead of a tax credit, lawmakers should consider making the money available to those who can’t come up with the initial capital by providing low-interest/no-interest loans. The loans could be paid back on an incremental basis in an amount of the avoided cost or savings realized.
Other tax credit proposals include one for teachers “because they spend their own money to buy classroom supplies.” Contrary to perception, it is not like there isn’t money in the budget for classroom supplies. Talk to any teacher and you’ll find that the reason they use their own money is because of the bureaucracy and red tape they must go through to process the purchase order to get the money for the supplies.
Teachers figure that it is easier to avoid the frustration by using their own money rather than going through the red-tape. So why can’t the department of education be a little bit more creative and use some of the technology that is already available. For example, if the department of human services can give welfare recipients debit cards instead of food stamps, why can’t the department of education give each of its teachers a debt card with which to purchase classroom supplies. The amount that could be charged can be limited as well as the type of supplies, just as much as the debit cards welfare recipients receive. Why do we need a tax credit to reimburse teachers for spending their own money, a credit that will be given regardless of whether or not that individual actually spent any of his or her money?
Then there are tax credits you would not believe. There is a proposal to reward people for taking classes in CPR. Another bill would give car owners a tax credit for maintaining motor vehicle insurance on their cars while others would provide tax credits to employers who provide reimbursements to the employees who need child care or provide child care facilities at no charge to employees.
The list goes on and on, an indication that lawmakers continue to believe that tax credits or spending is the panacea to the problems facing the community. Unfortunately, what lawmakers do not understand is that when it comes right down to the bottom line it is the economics of the situation that will drive taxpayers to do or not do certain things. Tax credits just happen to be gravy if by chance they are available for a certain type of activity.
Lawmakers need a lesson in the use of tax credits. Tax credits are designed to relieve taxpayers of tax burdens they can’t afford. Anything else amounts to nothing more than a “back door” subsidy that they couldn’t get through the “front door” appropriation process. As such, taxpayers and lawmakers lose sight of just how much the tax credit is costing all taxpayers. To say the least, this approach is less than accountable.

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