The Tax Expenditure Review Report released by the Minnesota Department of Revenue on February 15, 2011 recommends evaluating tax expenditures and bringing tax expenditures into the biennial budget process.
The Tax Expenditure Review Report was presented at a hearing of the Minnesota Senate Tax Committee of February 23, 2011. To complete the Tax Expenditure Review Report, the Minnesota Department of Revenue contracted with the following individuals to undertake the study in collaboration with the department:
Marsha Blumenthal, Professor Emerita, Economics, University of St. Thomas, Laura Kalambokidis, Associate Professor, Applied Economics, University of Minnesota, P. Jay Kiedrowski, Senior Fellow, Humphrey School of Public Affairs, University of Minnesota, John Spry, Associate Professor, Business Economics, University of St. Thomas, Judy Temple, Associate Professor, Applied Economics & Humphrey School of Public Affairs, University of Minnesota, Jenny Wahl, Professor, Economics, Carleton College
The Citizens League of Minnesota recommends “The Legislature establish a process for long-term evaluation of tax expenditures this year along the lines of the February 15, 2011 report “Bringing Tax Expenditures into the Budget Process.”
The Committee for a Responsible Federal Budget favorable reviewed the report in its Spotlight on the States: Minnesota blog post.
The 21st Century Taxation blog by Professor Annette Nellen also reviewed the report. Professor Nellen wrote:
I particularly like the statement about examining tax expenditure based on principles of good tax policy. The report notes three key principles: (1) neutrality or efficiency, (2) horizontal equity, and (3) simplicity. The authors note:
“A tax system based on these three principles would have far fewer tax expenditures than currently exist. Efficiency and equal treatment of equals both favor broad tax bases with low rates. Justified tax expenditures would include only tax provisions that offset a market failure or externality or that decrease the cost of tax administration by enough to offset lost efficiency or equity.”