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    Entries in tax credits (2)

    Tuesday
    Jun072016

    Cost of Tax Breaks for States, Localities May Be Exposed

    If approved, a new rule would make it easier for groups to challenge the tax exemptions that state and local governments get from the feds.
    BY  JUNE 7, 2016

    A proposed change in financial rules would shed more light on what the federal government gives up in tax breaks to state and local governments. If approved, it could provide ammunition to groups that want to reduce those benefits as a way of eliminating the federal budget deficit.

    The new rule, proposed by the Federal Accounting Standards Advisory Board (FASAB), would require the feds to include in annual financial reports the "revenue impact" (but not a precise calculation) of all Washington's lost revenue from tax breaks. The U.S. Treasury Department already estimates the cost of these expenditures, but they aren't included in federal annual financial reports.

    According to the Treasury Department, the provision that lets filers deduct their state and local income and property taxes from the income they declare to the federal government cost $84 billion in lost revenue just this year. An additional $32 billion accounts for state and local governments' much-beloved tax exemption for municipal bonds, which critics have been trying to repeal for years.

    But the largest federal deduction by far is the one employers get for their contributions to employee health insurance premiums and medical care. That cost the feds $211 billion in lost revenue this year. For perspective, the federal budget is a little under $4 trillion, while the budget deficit is a little over $500 billion.

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    Friday
    Apr152016

    The Week in Public Finance: Puerto Rico Drama and a Corn-y Kind of Tax Credit

    A roundup of money (and other) news governments can use.
    BY  APRIL 15, 2016

    Beyond the Numbers in Puerto Rico

    The drama over whether Congress should allow financially strapped Puerto Rico to restructure its debts has kicked up a notch after the recent announcement that the territory’s main financier was putting a moratorium on paying its debt, among other things. This week, a group called Main Street Bondholders launched an ad campaign calling the proposed federal legislation a “bailout” that “removes any incentive for Puerto Rico to remain at the table with bondholders.” The group says it represents the interest of retiree investors.

    In response, House Speaker Paul Ryan issued a lengthy statement charging that “big-money interest groups on Wall Street” were dumping “a lot of money toward sabotaging this legislation in order to force a last-minute bailout upon Puerto Rico.” That would put U.S. taxpayers on the hook for creditors’ “bad loans,” Ryan said, which is what Congress is trying to avoid.

    Anytime someone mentions “big-money interest groups on Wall Street,” it can be tempting to assume they're referring to Republican mega-donors Charles and David Koch. In this case, that's correct: The Main Street Bondholders were formed by the 60 Plus Association, a conservative small-government group that spent millions in the 2012 and 2014 election cycles to help elect conservative or Tea Party candidates. Much of its funding came from conservative groups with ties to the Koch Brothers. The group has been quiet until recently and no information is readily available yet on its funding and expenses this election cycle.

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