States Rethink Tax Breaks
June 10, 2011
Tough budget times are forcing state governments to rethink the tax breaks they grant, says USA Today.
- Michigan last week eliminated several tax credits, including those for small donations made to universities, food banks, museums and public television.
- The state also capped at $25 million a year the tax incentives it gives the film industry, which has been lured to the state since 2008 by some of the more generous incentives in the nation.
- The changes were part of a tax overhaul that Republican Gov. Rick Snyder says will spur job growth.
Economists generally favor more uniform taxation but acknowledge that incentives can advance policy goals such as capital investment, cleaner energy use or job creation, says Dana Johnson, recently retired chief economist at Comerica Bank.
Three Ohio think tanks have called for a review of tax credits to help solve that state's $8 billion budget shortfall. The Greater Ohio Policy Center, a progressive think tank that has joined with the libertarian-leaning Buckeye Institute and the centrist Center for Community Solutions in calling for a review of the state's tax policies, estimates that such tax breaks cost state government $300 million a year.
- One of the breaks that Michigan eliminated had allowed taxpayers to get a 50 percent refund of some charitable donations when they filed their state tax returns.
- About 550,000 people claimed it in recent years.
- Without it, Michigan will save $47 million a year, according to state budget estimates.
Source: John Wisely, "Cash-Strapped States Look to Roll Back Tax Credits," USA Today, June 6, 2011.
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