South Hampton Roads Earned Income Tax Credit Coalition

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full study online at http://www.taxfoundation.org/publications/show/26555.html

Washington, D.C., July 27, 2010 - With Members of Congress calling for punitive new tax laws against U.S. oil and gas companies in response to the BP oil spill, the Tax Foundation has released a new analysis showing federal, state and local taxes remitted by the oil companies have exceeded their corporate profits by 40 percent.

"Governments at all levels in the U.S. and abroad are dependent on the substantial taxes paid by oil and gas firms," said Tax Foundation President Scott A. Hodge, author of the new Tax Foundation Special Report, "Oil Industry Taxes: A Cash Cow for Government."

The new study, available at www.taxfoundation.org/publications/show/26555.html, shows that in recent decades, state and federal governments have "profited" far more from the oil industry than companies have.

"Governments have collected $1.95 trillion in taxes from the oil industry since 1981," said Hodge. "That's far more than the profits of major U.S. oil companies during the same period."

"As lawmakers respond to the Gulf oil spill and BP's poor safety record, they should refrain from undoing sound, principled tax policies such as the foreign tax credit that benefit every individual or corporate taxpayer that earns taxable income outside the U.S.," said Hodge.

The Tax Foundation is a nonpartisan, nonprofit organization that has monitored fiscal policy at the federal, state and local levels since 1937.

 Tax Foundation Special Report, No. 183, "Oil Industry Taxes: A Cash Cow for Government," is available at www.taxfoundation.org/publications/show/26555.html.

The Tax Foundation is a nonpartisan, nonprofit organization that has monitored fiscal policy at the federal, state and local levels since 1937.

 To schedule an interview, please contact Natasha Altamirano, the Tax Foundation's Manager of Media Relations, at (202) 464-5102 or naltamirano@taxfoundation.org.

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State-Local Governments and Individuals Receive Biggest Tax Benefits; Among Energy Firms, Tax Benefits for Renewable Industry Dwarf Those for Oil and Gas

Washington, DC, July 27, 2010 - The U.S. oil and gas industry is the beneficiary of some tax incentives whose benefit is comparatively small, according to a new Tax Foundation Fiscal Fact.     

"With deficits as high as they are, it's no wonder Congress is re-examining special tax provisions," said the new study's author, Tax Foundation president Scott Hodge. "That's a good idea, but Congress is drawing the bull's eye on the wrong target. Oil and gas tax subsidies are small compared to what other energy firms receive, not to mention the huge tax incentives that flow to state and local governments and to individuals."     

Some special depreciation provisions will indeed save the oil industry $2.8 billion next year, but at the same time renewable energy firms will receive $11.3 billion in corporate tax subsidies, and state-local governments $12.9 billion just through their bond exemption.     

"The $11.3 billion tax subsidy to renewable energy firms in 2011 is already, in effect, a tax penalty on oil and gas firms," Hodge adds. "And as for tax provisions that benefit all taxpayers, such as the foreign tax credit, Congress should not start mucking around with those laws to engineer a penalty for U.S. oil and gas firms, especially since the U.S. has one of the highest corporate tax rates in the world."     

Tax Foundation Fiscal Fact, No. 236, "Who Benefits Most from Targeted Corporate Tax Incentives," is available online at http://www.taxfoundation.org/publications/show/26554.html.     

The Tax Foundation is a nonpartisan, nonprofit organization that has monitored fiscal policy at the federal, state and local levels since 1937.                                

To schedule an interview, please contact Natasha Altamirano, the Tax Foundation's Manager of Media Relations, at (202) 464-5102 or naltamirano@taxfoundation.org. 

 

 

Tax Foundation Report: 18 States Offering Sales Tax Holidays in 2010, Up from 16 in 2009

Washington, DC, July 20, 2010 - As a number of states prepare for back-to-school sales tax holidays beginning early next month, an updated Tax Foundation study shows that the temporary, targeted periods of sales tax exemption are nothing more than political gimmicks that do little to help consumers. Instead, the holidays distort consumer choices while favoring certain industries over others, increase tax code complexity, and distract from real, permanent tax relief.

Eighteen states are offering sales tax holidays in 2010 - up from 16 in 2009 and 17 in 2008 - including 15 that exempt clothing, 10 for school supplies, six targeting computers, and five applied to Energy Star products. Tax Foundation Special Report, No. 182, "Sales Tax Holidays: Politically Expedient but Poor Tax Policy," is available online at http://www.taxfoundation.org/publications/show/26533.html.

"Sales tax holidays are gimmicks designed to win political points for lawmakers," said Tax Foundation Staff Economist Mark Robyn, who authored the paper with Tax Counsel and Director of State Projects Joseph Henchman and Adjunct Scholar Micah Cohen. "If lawmakers want to cut taxes, they should do so in a way that benefits everyone, no matter what they purchase or when they purchase it. Unfortunately, sales tax holidays only distract from genuine, permanent tax relief."

Compared to 2009, Florida, Illinois and Maryland added a sales tax holiday, while Georgia dropped its holiday, citing a $2 billion budget deficit. As of press time, the Massachusetts House had approved a bill to reenact a sales tax holiday on all items up to $2,500 from Aug. 14-15. If the Senate and governor approve the holiday, the total number of states with sales tax holidays in 2010 would be 19, an all-time high.

Among the report's key findings:

• Sales tax holidays do not promote economic growth or significantly increase consumer purchases; the evidence shows that they simply shift the timing of purchases. Some retailers raise prices during the holiday, effectively absorbing the benefit of the holiday and reducing consumer savings.

• Sales tax holidays create complexities for tax code compliance, efficient labor allocation, and inventory management.
• Most sales tax holidays involve politicians picking products and industries to favor with exemptions, arbitrarily discriminating between products and across time, and distorting consumer decisions. For example, Virginia's hurricane-preparedness sales tax holiday applies to cell phone chargers but not laptop chargers, and duct tape but not masking or electrical tape. South Carolina's gun sales tax holiday applies to firearms but not associated safety products.
• While sales taxes are somewhat regressive, sales tax holidays are a bad way of providing relief to the poor. Sales tax holidays amount to a 4 percent to 7 percent price reduction for all consumers, but only for a brief period of time.

"Taxes should raise revenue, not micromanage a complex economy by picking winners and losers in the market," Henchman said. "If a state must offer a 'holiday' from its tax system, it's a sign that the state's tax system is uncompetitive - something that must be addressed with permanent reform."

The Tax Foundation is a nonpartisan, nonprofit organization that has monitored fiscal policy at the federal, state and local levels since 1937.

 

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To schedule an interview, please contact Natasha Altamirano, the Tax Foundation's Manager of Media Relations, at (202) 464-5102 or naltamirano@taxfoundation.org.

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Calculator on www.MyTaxBurden.org Allows Taxpayers to Compare 2011 Income Tax Liability if Bush Tax Cuts Expire or Are Extended

Washington, DC, July 23, 2010 - The Tax Foundation has launched a "Bush tax cuts" calculator at www.MyTaxBurden.org, which allows taxpayers to compare their 2011 federal income tax liabilities under three scenarios: if all the Bush tax cuts expire completely at the end of this year, if they're all extended into 2011 or made permanent, and if President Obama's budget is adopted, which includes a combination of expirations and extensions.

Taxpayers can type in basic information—such as filing status, wage income and number of dependents—along with optional more detailed information—such as capital gains and dividend income, state and local taxes paid and other itemized deductions—and determine what their federal income tax burden would be in 2011.

"The fate of the 2001 and 2003 tax cuts remains uncertain, and congressional leaders seem poised to leave things that way through the August recess—and perhaps through the November elections," said Tax Foundation President Scott Hodge. "Regardless of what happens, our tax calculator at MyTaxBurden.org can help give taxpayers a better sense of how these policies will affect them—whether all the Bush tax cuts are extended or just those affecting families earning less than $250,000 a year, or if all the tax cuts expire."

For example, if Congress fails to act to extend the Bush tax cuts, the federal income tax burden for a married couple filing jointly making $80,000 with two children would be $2,137 higher in 2011 than if all the tax cuts were extended.

The calculator also allows for more detailed tax information. For example, consider a married couple making $500,000 with two children; long-term capital gains of $50,000; dividend income of $5,000; other income of $10,000; a state and local income tax deduction of $30,000; $10,000 in real estate taxes paid; and $40,000 in other itemized deductions. Their federal income tax bill would be $22,782 higher in 2011 if all the Bush tax cuts expire.

On the calculator page, fields left blank will automatically be counted as zero. Users may hover the mouse cursor over an item to get a more detailed description of each field. For more information, see a short video explanation of how the calculator works.

The calculator at www.MyTaxBurden.org is part of a series answering frequently asked questions about the expiration of the Bush tax cuts, available online at http://www.taxfoundation.org/publications/show/26135.html.

The Tax Foundation is a nonpartisan, nonprofit organization that has monitored fiscal policy at the federal, state and local levels since 1937.

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To schedule an interview, please contact Natasha Altamirano, the Tax Foundation's Manager of Media Relations, at (202) 464-5102 or naltamirano@taxfoundation.org.

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With the recently passed health care bill and billions of dollars in tax cuts set to expire in January if nothing is done, tax policy in Washington has been and will continue to be busy in 2010. With all of this action comes many questions about what is actually going on. This page is designed to "set the scene" for the general public, policymakers, and media with unbiased information relating to the current state of the federal tax system and what is set to happen. If you have any questions that are not answered, e-mail us and we will consider adding them to the list. (Note: We do not answer specific personal tax questions.)

1. What are the "Bush tax cuts," why are they expiring this year, and what is likely to happen?

2. How much did the Bush tax cuts cost the Treasury in foregone revenue?

3. Who received the biggest tax savings from the tax cuts?

4. Why were the tax cuts temporary (i.e. not made permanent) when they were passed in 2001 and 2003?

5. What is going on with President Obama's tax cuts, specifically those in the so-called stimulus bill?

6. How does this all interact with the Alternative Minimum Tax (AMT)?

7. What are PEP and Pease, and how were they affected by the tax cuts?

8. Can you provide a complete list of the tax provisions expiring at the end of this year (2010)?

9. What tax provisions expired at the end of 2009 along with the AMT patch, and what are the chances these will once again be extended retroactively?

10. Do you have a chart showing how the various scenarios (tax cuts expiring, tax Cuts extended, and Obama's proposal) would affect key tax parameters like tax rates and brackets, the standard deduction, etc.?

11. What exactly is going on with the federal estate tax right now?

12. How does the recently passed health care bill interact with all this?

13. Can you give me some examples of how families' income tax bills would change as a result of the tax cuts expiring?

14. How can I figure out how much my own tax bill would change as a result of the Bush tax cuts expiring?

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