States Can Avert New Revenue Loss by Decoupling From Federal Expensing Provision

Source: Ashali Singham and Nicholas Johnson, Center on Budget and Policy Priorities, March 1, 2011

A recent change in federal tax law regarding business investment in machinery and equipment could be very costly for many states — at a time when they can least afford it. Nineteen states are on track to lose $5.3 billion in state corporate and individual income tax revenues during the current and next two state fiscal years: some will lose revenue unless their legislatures act to prevent it, while others will lose revenue if they follow their previous practice of altering their tax codes to conform to such federal changes. Another 26 states and the District of Columbia could lose $10.1 billion in state revenue if they break from their previous practice and conform to the federal change.

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