PUBLISHED: “End Tax Cronyism in Oklahoma.”

I wanted to be sure to sure share an essay I published with the Oklahoma Council on Public Affair.

The you can read the essay here:

The post begins with (and is nicely summarized by) the following text:

Tax cronyism is the subversion of sound, pro-growth tax policy—away from universal and uniform applicability to all taxpayers and towards the interests of the politically favored and connected.

These sorts of tax provisions create competitive disadvantages in markets and massive economic distortions. They foster uncompetitive tax policy and and enable “quid pro quo” corruption.

Regrettably, Oklahoma is plagued by tax cronyism, which is the fruit of a rotten and failed ideology: economic central planning. The remedy is simple. Over the long term, policymakers should aim to end tax cronyism in all its forms. In the short term, they should increase transparency and accountability, thereby letting sunlight disinfect this rotten policy regime.

Tax reforms that unleash the creative potential of mankind by easing the burden of government on all productive, industrious economic activity are anything but narrow, unjust, unearned economic privilege. Tax cronyism, on the other hand, tends to favor the big, old, and sluggish “incumbent” firms for benefit.

Tomorrow’s titans of innovation and engines of economic growth are today’s faceless dreamers working 90-plus hours a week in some garage or basement, barely making ends meet, lacking a spare minute or dollar to spend convincing the political class to cut them a break. Sound, pro-growth tax policy targets the dreamers inventing the future, not those clinging to their share of the past.

The essay suggest the following broad guidelines for reforming tax cronyism:

Policy Reforms

With the goal of ending tax cronyism firmly in sight, Oklahoma can take immediate steps to cultivate a policy environment that is fertile ground for a privilege-free tax climate.e.

—Embrace Transparency: Ensure rigorous reporting on all tax preferences and grants.

—Seek Clarity: There must be no exemptions or exceptions from the label of tax cronyism where it is appropriate. Similarly, the terms must not be abused by demagogues to wrongly malign sound policy focused on market-driven growth. Cronyism anywhere advances cronyism everywhere.

—Ensure Accountability: All tax carve-outs must have a clearly stated purpose and that purpose must be translated into critical, measurable performance metrics. Moreover, those metrics should be measured by a rigorous economic assessment by independent experts, relying on sound methods of analysis, and frequently reviewed by policymakers

—Avoid Gimmicks: Policymakers should avoid the temptation to “improve” tax cronyism by “building a better mousetrap.” The problem of cronyism is excessive economic central planning. New layers of complexity cannot fix the problems or reduce the costs of public policy complexity.



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