New Standards Require States to Disclose Cost of Incentives

For the first time, state and local governments may soon be asked to report the full costs of tax subsidies for economic development.

Under new standards recently proposed by the Government Accounting Standards Board (GASB), a private organization whose accounting rules nearly all state and local governments conform to, government entities would be required to include the full cost of tax abatement spending in their Comprehensive Annual Financial Reports.

The umbrella term “tax abatements” would cover any agreement “in which (a) one or more governmental entities promise to forgo revenues from taxes…and (b) the taxpayer promises to take a specific action…that contributes to economic development.”

In a press release issued on Monday, Good Jobs First, a group that promotes corporate and government accountability, expressed cautious optimism that the new standards would shed light on the true costs of corporate tax incentives.

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