Is a State Tax Credit Subsidizing Out-of-state Businesses?
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Joe Wertz
As we’ve reported, several members of the tax credit task force recently took issue with the Oklahoma Capital Investment Board, which was created to bring venture capital funding to Oklahoma start-up companies. The OCIB leverages tax credits to raise money for venture capital investments.
The OCIB is a state public trust and Oklahoma is its only beneficiary.
But roughly 85-90 cents of every $1 invested by the OCIB goes to a start-up company outside of Oklahoma, according to an analysis by Gene Perry with Oklahoma Policy Institute, a nonprofit research organization that promotes equitable, responsible and sustainable fiscal and economic policies.
In a guest editorial on the institute’s website, Perry, a tax policy analyst, also cites a 2006 audit by the Oklahoma State Auditor and Inspector’s office, which shows that the OCIB invested in 18 venture funds that sent $26 million to companies here in Oklahoma.
About $939 million went out-of-state, Perry wrote.
… it’s simply wrong for states to gamble away tax dollars on out of state companies or to directly subsidize economic growth and job creation elsewhere. That’s not what the people of Oklahoma elected their State Legislature to do.
At the Aug. 24 meeting, the Task Force on State Tax Credits and Economic Incentives grilled OCIB president Devon Sauzek. Former State Treasurer Scott Meacham, who’s now with the State Chamber of Oklahoma, defended the tax credit, saying that capital formation is a “big problem” in Oklahoma.
OK Policy’s Perry disagrees:
… capital is abundant. What there is a shortage of in Oklahoma are good ideas worthy of investment. Certainly, there is a role for the Oklahoma Legislature to play in supporting the generation of creative ideas that grow jobs and increase economic activity.
