Oklahoma economist: It’s not the Legislature, Oklahomans, it’s you
By Byron Schlomach, 1889 Institute
Despite budget issues and Gov. Mary Fallin’s desire to raise more revenue, she recently signed a bill extending aerospace engineer employment tax credits for eight more years. This is a needless hole in the state’s revenue stream, not unlike the wind energy tax credits the governor agreed to end three years sooner than scheduled.
Admittedly, the aerospace incentives are less costly than wind incentives, totaling less than $10 million per year compared with the hundreds of millions wind incentives were expected to cost. Nevertheless, the aerospace incentive extension demonstrates some bothersome things about Oklahoma’s lawmakers.
First, many lawmakers may be pro-business but they are decidedly not pro-market. Judging by their statements, had state revenues not fallen, Fallin and the Legislature likely would have allowed wind credits indefinitely, believing they help grow a new industry. But markets (and people in general) are not well served when politicians artificially make some industries more profitable through special tax privileges and subsidies. We at the 1889 Institute recently published a paper demonstrating the true high cost of wind power. When federal tax breaks end, this cost will become increasingly evident to businesses and families.
The aerospace credits demonstrate pro-aerospace business attitudes on the part of lawmakers, but just like wind credits, they can only distort economic decisions by artificially changing costs in comparison to what other businesses face. So, perhaps our lawmakers are less pro-business than they are pro-certain businesses and their employees, but anti-everybody else.