Advocates for Independent Business (AIB) today hailed a newly issued accounting rule that will require local and state governments to annually disclose the amount of tax breaks they give to corporations in the name of economic development.
The rule change was proposed earlier this year by the Governmental Accounting Standards Board (GASB). In February, AIB submitted a public comment letter strongly supporting the proposal and urging the board to go further by mandating that governments not only report the aggregate amount they spend on corporate tax breaks, but also disclose the details of individual deals.
“This issue is of significant interest to our member organizations, because when cities and states use tax breaks, as they often do, to subsidize the growth of large companies like Walmart and Amazon, it directly affects the competitive landscape for independent businesses,” said Stacy Mitchell, coordinator of AIB. “We commend GASB for issuing this new rule, which will make the total cost of these tax breaks transparent for the first time and open the way for meaningful public debate about whether they are warranted.”
Cities and states currently spend an estimated $70 billion a year on tax breaks for economic development. Studies indicate that subsidizing big retailers does more harm to the local economy than good by causing job and revenue losses at competing small businesses.