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    What the Federal Tax Code Reveals About State Revenues

    States often adopt the same tax policies as the feds, but should they?
    BY  FEBRUARY 18, 2016

    Late last year, Congress approved a tax relief package that extended many credits and exemptions. For the sake of consistency, states typically adopt the same credits and exemptions.

    But some states choose to be more connected to the federal tax code than others, meaning they have more policy decisions to make when Congress changes its rules.

    Take Maine, for example. Lawmakers there are caught in a battle over whether to adopt Congress’ extension of the so-called bonus depreciation, which lets businesses deduct half of their equipment investment in a given tax year, rather than deduct the depreciated value over a period of time. The exemption was enacted for a specific, short-term purpose: to provide an economic stimulus during the recession. But Congress has extended it on a limited basis through 2019. Gov. Paul LePage and other Republicans want the state to follow the feds through 2019, but Democrats want to limit the program and use the savings to give $23 million to schools.

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