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NYT Wants States To Reject A ‘Tax Cut’

A press release disguised as a news article in the New York Times, from a radical left wing Soros funded front group:

A Tax Cut May Carve Into the Budgets of 19 States

March 1, 2011

Struggling states could lose as much as $5.3 billion in tax collections during the next few years in an unintended consequence of one of the lower-profile federal tax cuts that President Obama signed in December, according to a report released Tuesday.

Never mind that this is practically the only ‘tax cut’ that Mr. Obama signed in December. And, as we will explain, it is not even a real ‘tax cut.’

The tax-cut package the president signed in December is best known for extending the Bush-era tax rates for two years and giving a one-year payroll tax cut to most Americans. But it included a business tax cut that could blow a hole in state budgets: a provision allowing businesses to deduct the full value of new equipment purchases from their taxes through 2011.

In other words, the tax deductions businesses would eventually get over three years have just been moved up so that they can get them all at once. So this is not even a tax cut, after all.

That cut, intended to spur the economy by encouraging businesses to spend more money on equipment, could end up costing 19 states as much as $5.3 billion in lost revenue over the next few years, according to the report, by the Center on Budget and Policy Priorities, a research organization based in Washington.

Notice how The Times does not bother to tell its readers any thing about the Center on Budget and Policy Priorities. (We will get to what it’s about below.)

The 19 states stand to lose money because they link their state tax laws to federal tax law. So the newly allowed federal tax deductions that businesses in those states take will lower their taxable incomes, which would in turn have the effect of driving down state corporate and income tax collections.

The change could cost Illinois, North Carolina, Pennsylvania and other states hundreds of millions of dollars of lost revenue unless they decide to enact laws decoupling their state tax laws from the federal ones, the report said.

Once again, this is not a tax cut. The businesses would have gotten these same tax deductions eventually. They would just have been spread over three years. So how are the states losing any revenue? — They aren’t.

When similar cuts have been passed before, it noted, many states have chosen to break with federal laws.

But some states do not intend to do so this time. In Pennsylvania, which the report estimated could lose $833 million in revenues over the next few years, the state’s Department of Revenue announced last month that it had settled on a “business-friendly” interpretation of the law that could benefit as many as 117,000 corporate taxpayers.

The department said the new policy would not affect Pennsylvania’s revenues in the long run because companies would simply be taking full deductions now, rather than spreading them out over several years.

Which is inarguably true. But notice that only readers who bother to plow this deeply into the article would ever see this minor detail.

But this is a hard time for Pennsylvania to give large tax breaks up front: the state faces an estimated $4 billion deficit in the coming fiscal year.

Could it be that Pennsylvania and the rest of the states realize that they will actually get more revenue if they lower their business taxes rather than raise them?

This concept never seems to have occurred to The Times or their masters at the CBPP. And there is a reason for that. The Soros-funded Center on Budget and Policy Priorities has its own agenda.

According to Discover The Networks:

Center on Budget and Policy Priorities (CBPP)

The Center on Budget and Policy Priorities was founded in 1981 for the specific purpose of analyzing the impact of federal budget priorities and proposed tax policies on America’s poor. Since the 1990s the organization has broadened its focus to include also state budgets and their implications "both for low-income populations and for the nation as a whole."

Reasoning from the premise that tax cuts generally help only the wealthy, CBPP advocates greater tax expenditures on social welfare programs for low earners

CBPP is a member organization of the Moving Ideas Network (MIN), a coalition of more than 250 leftwing activist organizations working to develop and disseminate progressive policy and advocacy recommendations.

CBPP Board members include, among others: Henry J. Aaron, Senior Fellow at the Brookings Institution; Marian Wright Edelman, President of the Children’s Defense Fund; and Robert D. Reischauer, President of the Urban Institute…

Still, if George Soros says the states should reject this (non) ‘tax cut’, then clearly the states should reject this (non) ‘tax cut.’ After all, who is in charge here?

This article was posted by Steve on Wednesday, March 2nd, 2011. Comments are currently closed.

4 Responses to “NYT Wants States To Reject A ‘Tax Cut’”

  1. proreason says:

    Does anybody really know the total tax burden in the US?

    Fed taxes hover around 20% of GDP (which includes federal corporate income taxes, and I think that number must also include FICA and Medicare taxes).
    Sales taxes probably average about 5% of purchased goods.
    State income taxes probably average about 1-2% of income
    Real Estate taxes average 1-2% of assessed value, which on average is about 1 to 2 times average income.

    I think that’s probably around 30% of a typical person’s income.

    But it doesn’t include gobs of taxes that I can’t begin to estimate:
    – state corporate taxes
    – gasoline taxes, utility “fees”, telecomm “fees”, etc., etc.
    – many direct user fees at the city, state, and federal levels. i.e., DL fees, other fees paid for a governemnt svc.

    Some website probably has the answer. I’ll bet taxes and government fees consume 35-40% of national income.

    But I would also argue that we pay much higher prices for almost everything because of government. One simple example is that corporations treat the taxes they pay as costs, which means they pass them on to consumers and add profit. So, if the cost of a $100 item contains $20 in tax costs, and the business targets a 10% profit, if the taxes were removed, the price would be $77 rather than $80.

    Another example is medical costs. Medicare underpays doctors and is rife with fraud. Medical suppliers, in order to stay in business, charge everybody else more to make up for the medicare shortfall. That’s a hidden tax that is probably replicated in smaller ways in hundreds of places.

    And even that doesn’t include the costs imposed on businesses by out of control governments. We know how expensive Crap and Tax would be. What we don’t know is the enormous impact on costs that thousands of other needless regulations impose. For example, with gas now above $3 per gallon, wouldn’t it be less than half that if government would let oil companies drill in the US?

    I would bet my life that the cost of government in this country is at least 50% of national income, in direct, indirect, hidden taxes and the costs of regulation. For entrepreneurs and small business people, that probably goes to 70%. For the independently wealthy, most of whom buy Democrats, it is probably 10% or less.

    • JohnMG says:

      Calculate the tax on a pack of cigarettes in New York at nearly $4 per pack. Likewise alcoholic beverages. I think you would find that the percentage is well over 50%. Remember that almost everything purchased with disposable income is taxed. New cars, used cars, recreational items, firearms and ammunition………..the list is endless.

      If the average person stopped to calculate it…….I mean everyone………there would be a massive tax revolt in this country. Especially the welfare recipients. If they were aware of the money extracted from their “freebies” through hidden taxation, even they would rebel.

    • tranquil.night says:

      You guys are exactly right. Just at a raw market level, taxes increase the price of operation by a multiplicative factor, not an additive one. Choose any business right now and remove its main stressor by lowering and simplifying the tax and regulatory code, and competitive prices would drop dramatically, not just by a margin of what the net cost of the tax was, but by a factor of every additional hidden expense heaped on the business to overcome that tax burden and still yield healthy profit. That means the cost of running whole legal and accounting divisions just to handle the muck of the current corporate tax and regulatory codes.

      It’s like I say. If we manage to punch through the current American quagmire by defeating the children to whom we’ve allowed to occupy and corrupt the throne of freedom, the next time we may well be fighting Leftism might be on Mars or beyond, because of what we’re capable of in the coming future if we would only unleash the full potential of this country.

    • proreason says:

      good point about the legal and accounting sections, tn

      That is a very substantial additional form of hidden taxation. Large businesses have dozens of people devoted to that stuff. I would speculate that there are up to 100,000 people in the US devoted to those functions. None of which counts that day or two, plust costs, that many indivuals spend on preparing taxes and other government forms.

      And, of course, there is even more. Businesses maintain entire organizations dedicated to “compliance” which exclusively means compliance with government regulations. For Health Insurers, it’s a major component of the business. For small businesses, the owner frequently performs that function, which takes time away from selling and improving the product line.

      Not all regulation is bad, but all regulation has a cost. Unfortunately, the cost of unnecessary (even harmful) regulation isn’t any less that useful regulation.

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