(TRENTON) — Legislation Assembly members Linda Greenstein and Wayne DeAngelo sponsored that will require the state budget to include a detailed accounting of the various tax breaks allowed under law to measure whether deductions or write-offs are meeting their stated goals is now law.
“It’s very easy to tell whether a certain tax is an economic help or a hindrance, but we have practically no way of telling whether the many tax credits, deductions and cuts on our books are actually making the grade,” said Greenstein (D-Middlesex/Mercer). “The best way to ensure that adequate data is regularly available on the financial effects of state tax expenditures is to require that the Governor include such data in the annual budget message to the Legislature.”
Under the new law, the Governor’s annual budget message will be required to include detailed reporting on the fiscal impact of all policies that allow individuals and corporations to lower their individual tax liabilities; budget documents currently only report how much is raised through actual taxation. The report will identify the statutory authority for each tax allowable tax break and determine whether it has been effective in achieving its goal.
Greenstein and DeAngelo said the report will allow lawmakers to assess state tax policy as a whole in order to propose beneficial reforms.
“Everyone likes a tax break, but when a loophole that’s well past its time is continually exploited to save one filer money it inevitably falls to everyone else to make up the difference,” said DeAngelo. “We cannot make tax policy in a vacuum. To properly determine the effectiveness of our tax laws, we need to know not just how much the state is taking in, but what’s on the other side of the ledger, as well.”
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