Business Expensing Proposal Would Add to State Fiscal Problems

Source: Nicholas Johnson and Ashali Singham, Center on Budget and Policy Priorities, November 11, 2010

From the summary:
President Obama’s proposed temporary tax incentive to encourage business investment in machinery and equipment would cost states up to $20 billion instate corporate and individual income tax revenues during the current and next two state fiscal years. [1] This loss would come on top of states’ record revenue losses resulting from the recession, which are creating budget shortfalls of unprecedented size; state shortfalls are likely to exceed $130 billion for state fiscal year 2012, which starts July 1, 2011 in most states. The additional state revenue losses resulting from the proposal would make it necessary for states to enact additional budget cuts or tax increases, which would reduce the proposal’s overall stimulative effect.

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