Local media tries to will Tacos San Pedro tax credit scandal to life…
10:54 AM EST on January 30, 2023
Last week, Wendy Suares and KOKH Fox 25 were the first to break the beginings of a scandal that, if everything checked out, could put the Swadley's Foggy Bottom Swindle to shame, and then some.
According to a review of tax documents, it appeared that Taco San Pedro – one of Louis Fowler's five favorite taquerias – had received $239MM from a tax program called the “Oklahoma Investment/New Jobs credit.
You will find what some consider the best Mexican food on the south side at a beloved little restaurant- Tacos San Pedro. A mainstay in the metro for more than three decades, it has gotten rave reviews online and has even attracted some big-name diners, like Oklahoma Governor Kevin Stitt. A photo from his visit in August of 2022 is featured on the restaurant's Facebook page.
But what is the small local taco shop doing on a list of behemoth companies getting massive tax breaks in Oklahoma? Along with companies like Google, Canoo, and OG&E, Tacos San Pedro is named on a watchdog site.
After the Swadley’s Foggy Bottom Swindle gained so much traction—then was completely discarded and ignored by voters in November—you can't blame Wendy and Fox 25 for gobbling up this scoop like it was a chip covered in guacamole.
Kevin Stitt’s favorite taco joint (Facebook wouldn’t lie) – a business worth a cool $264K – pocketed nearly $239MM from a tax program called the “Oklahoma Investment/New Jobs credit!”
Per the Oklahoma Department of Commerce’s website, this credit is based on “investment or new employees.” The credit is the greater of 1% per year of investment in new depreciable property or $500 per new job. Doing some quick math, that means Tacos San Pedro created 477,157 jobs last year after making at least $40MM of investment that clearly hasn’t been factored into their property assessment... yet.
That doesn’t sound likely.
To her credit, Wendy did do some background to verify the info. First, she clicked on the link on Good Jobs First’s website that took her to the Open Books data provided by the State of Oklahoma to get to the source data to verify they didn’t copy and paste the data incorrectly.
Next, she asked the Tax Commission about Tacos San Pedro’s exorbitant tax credit. If the agency was trying to head off a potential scandal, they handled it about as poorly as possible. Citing privacy concerns, they told Suares that their hands were tied, instead of doing a quick verification that the data on Open Books was accurate. To that, they passed the buck to the Office of Management and Enterprise Services.
Taco San Pedro’s owner Eva Gil—notably not located on a private island eating Coctel de Camarones—seemed as surprised as Suares that their business of 11 employees appeared on the report.
“I never applied for it, and I never got it,” she told the station...
Gil seemed just as confused as we were about how her restaurant ended up on this list. We told her, "If there was a mistake made, or someone applied or filed using your name, we just want to get to the bottom of it." Gil responded, "Can you give me the name of the person I can talk to about this because this is a little perturbing to me?" We directed her to the Oklahoma Tax Commission.
Using Occam’s Razor, the most likely explanation is probably the truth, and in this case, the whole situation certainly looks like a clerical error.
Using some of the skills I learned in accounting school, I pulled a few years of data from the source data. In 2019, the State of Oklahoma awarded $522MM in Oklahoma Investment/New Jobs Credits, and $574MM in 2020. The report for 2021 shows it ballooning to $924MM. That’s about a 75% increase over two years.
So, maybe it is a case of a tiny business defrauding the state out of nearly a quarter billion dollars with the help of the Governor. However, if the Tax Commission awarded such an increase in tax credits, that should have an impact on the total collections for corporate income taxes.
From page 207 of the State of Oklahoma’s Annual Comprehensive Financial Report for fiscal year 2021, here are the last five years of corporate income tax revenue:
Revenue was actually way up and higher than it has been since 2013.
Anyway, there are a number of things can explain how an error could have occurred in pulling data.
If I had to guess, I would wager that the database query probably had a formula error that overstated the numbers. Then, with OMES being divorced from the information they were responsible for reporting, they had no ability to verify the validity of the report. With OTC disinterested in becoming involved, the onus for proving they did not receive a fortune fell to the confused small business owner trying to sell authentic Mexican food.
For Taco San Pedro’s part, they've added fuel to the conspiratorial fire and have noped out of the saga:
Could this mean that Tacos San Pedro is on the lam, hiding nearly a quarter of a billion dollars in ill-gotten gains?!
It seems like KOKH certainly wants you to jump to that conclusion, but I would just assume the taco shop's owners are tired of being hassled by the local media over a clerical error they didn't commit.
Obviously, the taqueria could simply make all this go away by dedicating their time to solving a bureaucratic nightmare that has already thwarted professional reporters, proving a negative, and/or simply explaining to Wendy Suares how they have spent all that money. And if the news hounds at Channel 25 are satisfied with the answers, maybe they will commit four seconds of their newscast to reveal the findings.
Sounds simple when you think about it.
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