{"id":2394,"date":"2011-12-01T11:40:32","date_gmt":"2011-12-01T17:40:32","guid":{"rendered":"http:\/\/stateimpact.npr.org\/oklahoma\/?p=2394"},"modified":"2012-12-27T13:27:56","modified_gmt":"2012-12-27T19:27:56","slug":"in-the-transferable-tax-credit-market-transparency-is-not-part-of-the-trade","status":"publish","type":"post","link":"https:\/\/stateimpact.npr.org\/oklahoma\/2011\/12\/01\/in-the-transferable-tax-credit-market-transparency-is-not-part-of-the-trade\/","title":{"rendered":"In the Transferable Tax Credit Market, Transparency is Not Part of the Trade"},"content":{"rendered":"
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Joe Wertz \/ NPR StateImpact<\/p>\n

Task force co-chair David Dank presiding over a meeting of the Task Force for the Study of State Tax Credits and Economic Incentives.<\/p>\n<\/div>

A legislative task force<\/a>\u2019s final report could make it harder for some Oklahoma companies to avoid paying their full tax bill, a legal dodge that has cost the state millions in tax revenue.<\/p>

State Rep. David Dank, R-Oklahoma City, has been trying to shed light on transferable tax credits for months.<\/p>

His beef is that these taxpayer dollars, intended for things like the purchase of locally produced coal and the construction of energy-efficient homes, often end up with third parties who have nothing to do with the industries the credits are meant to support. Banks and insurance companies buy them to decrease their tax liability.<\/p>


\nhttps:\/\/stateimpact.npr.org\/oklahoma\/files\/2011\/11\/TransferableCreditStory1.mp3<\/a><\/audio><\/p>

\u201cTaxpayer dollars should never be traded around to the highest bidder in a shell game like some we have seen,\u201d Dank said. \u201cAny tax credit should at minimum benefit only the recipient.\u201d<\/p>

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\u201cI don\u2019t think that we yet have enough facts. I do think we have rhetoric.”<\/p>\n

-State Treasurer Ken Miller<\/h6>

[\/module]<\/p>

Vernon McKown is co-owner of Ideal Homes and benefits from the energy efficiency credit<\/a>. But the amount he owes in taxes is far less than the number of credits he qualifies for. So, he makes money off the leftovers.<\/p>

\u201cA tax credit sells for about 80 to 85 cents on the dollar,\u201d he said. \u201cSo, in Oklahoma, you could buy $10,000 worth of tax credits for $8,000 or $8,500, and you would save $1,500.\u201d<\/p>

It\u2019s not just big businesses and insurance companies buying transferable credits. Practically any individual can buy them.<\/p>

I actually drove to Phoenix Coal Sales in Vinita to buy one for myself. It started off promising when I called and talked to one of the company\u2019s secretaries, but when I arrived, the deal fell through. Vice President Clay Hartley emerged from his office and shot me down.<\/p>\n

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Logan Layden \/ NPR StateImpact<\/p>\n

Clay Hartley, Vice President of Phoenix Coal Sales, discusses transferable tax credits in his Vinita, Okla. office.<\/p>\n<\/div>

\u201cWhat\u2019s the difference to you whether you have a tax credit or not? Why are you pushing so hard for the tax credit?\u201d Hartley said. \u201cWe\u2019re not trying to hide anything, and if you start insinuating we\u2019re trying to hide something … I\u2019ve had enough disparaging remarks from some members on the committee that, quite frankly, we\u2019re just backing away from it … You know, turn that [recorder] off.\u201d<\/p>

Transferable credits are a touchy subject right now.<\/p>

Before the current two-year moratorium, eight transferable credits cost the state more than $74 million from 2007-2009. But just how much of that amount was actually transferred is obscured from the public \u2014 and the State Tax Commission. Rep. Dank says it could be as high as 90 percent.<\/p>

Business owners turn their accounting firms or brokers to deal in what\u2019s become a transferable credit market.<\/p>

One such broker is Josh Lederer, Vice President of Fallbrook Capital, based in Los Angeles. He says about 20 states have transferability programs and ending them would cause the credits to lose their incentive power.<\/p>

\u201cThen you basically have something you can\u2019t use,\u201d Lederer said. \u201cIf the credits are not transferable and I generate a credit, but I\u2019m not paying taxes in the state, then I really have no need for it. There\u2019s no benefit from it.\u201d<\/p>\n

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