Category Archives: Taxation

State Business Incentives: Trends and Options for the Future

Source: Jennifer Burnett, Council of State Governments, Capitol Research Special report, October 2011

From the summary:
During the past three decades, states have developed various incentive programs designed to encourage economic activity in order to create, retain or expand business opportunities.

In addition to tax and financial incentives, some states have used customized, company-specific incentives to engage in bidding wars with other states, making interstate competition for industries and businesses increasingly intense. Others have offered incentives to recruit business and financial investment from abroad….

…Now, in the face of severe fiscal turmoil, policymakers are looking at their incentive programs more closely to ensure they are truly getting a return on their investments. To help state policymakers make informed decisions, The Council of State Governments offers the third edition of State Business Incentives: Trends and Options for the Future. This report contains information and data on business incentives offered by states; trends in the types of incentives offered; discussion of the accountability and oversight of incentive programs; and policy options and courses of action for state policymakers to consider for the future.

A new feature for this year’s report is an accompanying Web tool that provides access to state business incentive profiles. The Web tool provides information about the state’s primary economic development agency or program and allows users to compare a number of measures across states, including:

* Current incentives offered
* Key tax rates including personal and corporate income and excise tax rates
* Key indicators such as educational attainment, income and population

Corporate Taxpayers & Corporate Tax Dodgers, 2008-2010

Source: Robert S. McIntyre, Matthew Gardner, Rebecca J. Wilkins, Richard Phillips, Citizens for Tax Justice, November 2011

From the summary:
280 Most Profitable U.S. Corporations Shelter Half Their Profits from Taxes.

“These 280 corporations received a total of nearly $224 billion in tax subsidies,” said Robert McIntyre, Director at Citizens for Tax Justice and the report’s lead author. “This is wasted money that could have gone to protect Medicare, create jobs and cut the deficit.”

* 30 Companies average less than zero tax bill in the last three Years, 78 had at least one no-tax year.
* Financial services received the largest share of all federal tax subsidies over the last three years. More than half the tax subsidies for companies in the study went to four industries: financial services, utilities, telecommunications, and oil, gas & pipelines.
* U.S. corporations with significant foreign profits paid tax rates to foreign countries that were almost a third higher than they paid to the IRS on their domestic profits.
See also:
Press release

The Local Crunch: How states pass the pain to cities and counties

Source: Stateline, October 2011

From the summary:
Tough economic times are taking a toll on the relationship between states and localities. In this series, Stateline examines what’s at stake as states cut local aid and shift responsibilities to cities and counties.
Articles include:
Part 1: Budget cuts reduce state aid to localities
Part 2: Property tax caps and their impact
Part 3: California reshapes local roles and revenue streams

Income Mobility and the Earned Income Tax Credit: Short-Term Safety Net or Long-Term Income Support

Source: Tim Dowd, John B. Horowit, Public Finance Review, Vol. 39 no. 5, September 2011
(subscription required)

From the abstract:
The authors use a unique data set of federal tax returns to analyze usage and participation patterns of the Earned Income Tax Credit (EITC) over the period 1989-2006. The authors find that most EITC recipients claimed the EITC for short periods, 61% for 1 or 2 years. Over the period examined, the EITC reached approximately 50 percent of the taxpayers with children. Finally, the authors find considerable income mobility among the EITC eligible population. Only 11 percent of those claiming the EITC in 1990 and in the third decile of income were in the same decile in 2003. They also find that 20 percent of EITC claimants claim the EITC for more than 5 years.

2011 2nd Quarter Summary of State and Local Government Tax Revenue

Source: U.S. Census Bureau, September 2011

From the press release:
This summary shows quarterly tax revenue statistics on property, sales, license, income and other taxes. Statistics are shown for individual state governments as well as national estimates of total state and local taxes, including 12-month calculations. This quarterly survey has been conducted continuously since 1962.

City Fiscal Conditions 2011

Source: Christopher W. Hoene & Michael A . Pagano, National League of Cities, Research Brief on America’s Cities, September 2011

From the press release:
The nation’s cities are cutting personnel and infrastructure projects as the economic downturn continues to take its toll on city finances according to the National League of Cities’ (NLC) 26th annual City Fiscal Conditions report.

The report reveals that general city revenues are continuing to fall, with a projected -2.3% decrease by the end of 2011. This is the fifth straight year of declines in revenue with probable further declines in 2012.

The revenue decline is mainly due to the suppressed property market that is negatively impacting property tax revenue. Property tax collections are expected to decline by -3.7% with further declines likely in 2012 and 2013.

Income tax receipts are also experiencing a decrease of -1.6%. Sales tax receipts remained largely flat, but this is at last year’s level which saw the worst decrease in sales tax revenue in 15 years.

Cities are responding by cutting personnel (72%), delaying infrastructure projects (60%) and increasing service fees (41%). One in three (36%) cities report modifications to employee health care benefits.

Tax Cuts Don’t Create Jobs: 3 New Fact Sheets on State Economic Development

Source: Institute on Taxation and Economic Policy (ITEP), 2011

From the Citizens for Tax Justice summary:
The Institute on Taxation and Economic Policy (ITEP) offers a series of Policy Briefs designed to provide a quick introduction to basic tax policy ideas that are important to understanding current debates at the state and federal level. This week ITEP releases three briefs that focus specifically on taxes and economic development, including sustainable economic development strategies, important questions to ask about economic development research and the reasonable suggestion that recipients of tax breaks report back on their economic contributions.

These three updated briefs can be found here:
· Taxes and Economic Development 101
· Fighting Back: Accountable Economic Development Strategies
· Examining Economic Development Research

Executive Excess 2011

Source: Sarah Anderson, Chuck Collins, Scott Klinger, Sam Pizzigati, Institute for Policy Studies, August 31, 2011

From a summary:
Shareholders should reward CEOs for building better products or delivering better services, not for accounting gymnastics that game their tax bills down.

For an elite group of American CEOs, sacrifice is for chumps.

As the nation struggles with budgetary constraints, Congress has exempted a group of imperial CEOs and their companies from contributing to the solution.

One special group of CEOs enjoys huge compensation packages while presiding over companies that pay little or no taxes. Twenty-five companies paid their CEOs more last year than they paid in U.S. corporate taxes, according to a new report from the Institute for Policy Studies that I co-authored.

The Nonprofit Margin: Addressing the Costs of the Nonprofit Exemption in New Orleans

Source: Bureau of Governmental Research, March 2011

From the press release:
The report examines the impact of the nonprofit exemption on government
finances and tax rates and various approaches for mitigating that impact….The report explores a full array of options, including elimination of the exemption. Ultimately, it recommends establishing a more restrictive framework for exemptions; improving administration; taxing nonprofits at a reduced level; and imposing service charges….The report explores four options: voluntary payments of lieu of taxes, or PILOTs, from nonprofit institutions; a state program to reimburse local governments for revenue lost due to nonprofit exemptions; taxing nonprofit-owned property at a reduced level; and service fees.
Related:
New Orleans mayor abandons for the coming year efforts to make some nonprofit groups pay property taxes
Source: Mark Schleifstein, The Times-Picayune, December 20, 2011

Impact of the Level of State Tax Code Progressivity on Children's Health Outcomes

Source: Laura Brierton Granruth and Joseph J. Shields, Health and Social Work, Volume 36, Issue 3, August 2011
(subscription required)

From the abstract:
This research study examines the impact of the level of state tax code progressivity on selected children’s health outcomes. Specifically, it examines the degree to which a state’s tax code ranking along the progressive–regressive continuum relates to percentage of low birthweight babies, infant and child mortality rates, and percentage of uninsured children. Using data merged from a number of public data sets, the authors find that the level of state tax code progressivity is a factor in state rates of infant and child mortality. States with lower median incomes and regressive tax policies have the highest rates of infant and child mortality. With regard to the percentage of children 17 years of age and below who lack health insurance, it is found that larger states with regressive tax policies have the largest percentage of uninsured children. In general, more heavily populated states with more progressive tax codes have healthier children. The implications of these findings are discussed in terms of tax policy and the well-being of children as well as for social work education, social work practice, and social work research.