Tax Reform

Keeping State Governments Open and Accountable to Taxpayers

Celebrate Sunshine Week with ALEC Ideas!

“We might hope to see the finances of the Union as clear and intelligible as a merchant’s books, so that every member of Congress and every man of any mind in the Union should be able to comprehend them, to investigate abuses, and consequently to control them.” –Thomas Jefferson

Citizens deserve to know how their government spends their hard-earned tax dollars. With this mission in mind, the ALEC Task Force on Tax and Fiscal Policy has worked hard to develop policy solutions to keep state governments open and accountable to their hard working taxpayers. The Taxpayer Transparency Act, the Taxation Disclosure Act and the Federal Receipts Reporting Act all help to promote fiscal transparency.

The Taxpayer Transparency Act makes state spending data easily available to anyone with an Internet connection. This ALEC model policy directs the state to provide a searchable budget website to show taxpayers how and where their tax dollars are spent. Since adopting the Taxpayer Transparency Act in 2007, dozens of states have established online searchable databases of government expenditures. These online databases have reduced the burden of paperwork for government agencies, identified waste in state spending and have earned millions of hits. Today, nearly every state in the Union has an online database of government expenditures. Ohio’s Online Checkbook initiative, spearheaded by Ohio Treasurer Josh Mandel, is a great example of budgetary transparency.

On the other side of the fiscal coin, the Taxation Disclosure Act promotes transparency in state and local tax rates. Taxpayers deserve easy access to information on state and local tax rates. However, this information is often difficult for taxpayers to access and aggregate. Without easy access to this information, taxpayers cannot fully understand the true cost of government services. This ALEC model policy solves this problem by directing the state budget office to create an online searchable budget database of each tax rate for all taxing districts in the state. The database allows taxpayers to search by zip code or physical address. Furthermore, the database includes a tax rate calculator to help citizens estimate their potential tax bill.

Finally, the Federal Receipts Reporting Requirement Act lets the sun shine in on federal funding in state budgets. States are increasing their dependence on federal funds at a time when the federal government is facing difficult fiscal challenges. The Federal Receipts Reporting Requirements Act helps to prepare states to absorb fiscal stress from Washington by requiring state agencies to disclose total federal receipts, the percentage of federal receipts in their budget, and a contingency plan if federal receipts are diminished. Utah’s Financial Ready initiative and Idaho Governor Butch Otter’s fiscal preparedness executive order are both great examples of transparency in federal funding, which can help states prepare for an uncertain fiscal future.

The ALEC Task Force on Tax and Fiscal Policy will continue to develop policies to increase state fiscal transparency. In order to make wise decisions about their government, taxpayers must have access to information about their state budgets and tax rates. The Taxpayer Transparency Act, the Taxation Disclosure Act and the Federal Receipts Reporting Requirements Act are all positive steps towards an more accountable and open state government.


In Depth: Tax Reform

Mainstream economists, small business owners and taxpayers across the country understand that growth-oriented reforms mean increased opportunity for all. As demonstrated by the annual Rich States, Poor States: ALEC-Laffer State Economic Competitiveness Index, sound tax and fiscal policies are critical to economic health, allowing businesses and households to flourish. A …

+ Tax Reform In Depth