If We Cut Corporate Taxes Does Is That Good For the State and Jobs? NO! How States Lose $600 Million On A Worthless Corporate Tax Break

If We Cut Corporate Taxes Does Is That Good For the State and Jobs? NO! How States Lose $600 Million On A Worthless Corporate Tax Break

There’s no shortage of corporate tax giveaways at both the federal and state levels. Lawmakers of all stripes love to use the tax code to subsidize companies, either directly or indirectly.

But in some instances, federal tax breaks for corporations undermine state budgets. As the Center for Budget and Policy Priorities detailed today, one particular tax break will cost states $600 million next year:

    The federal government created this tax break, known as the “domestic production deduction,” in 2004. Since most states base their own tax codes on the federal tax code, the tax break was carried over into many states without specific legislative scrutiny or a vote. Now it is costing not only the federal government but also 25 states a large amount of money. By 2014, it will cost these states over $600 million per year.

    The deduction — enacted as Section 199 of the federal Internal Revenue Code — allows companies to claim a tax deduction based on profits from “qualified production activities,” a sweeping category that goes well beyond manufacturing to include such diverse activities as food production, filmmaking, and utilities — a substantial share of states’ corporate income tax base.

These deductions are largely worthless, and many states have tossed them overboard. But 25 states still leave it intact:

As CBPP noted, “Firms can claim the domestic production deduction for profits from all qualifying domestic activities — meaning activities that occur anywhere within the United States. As a result, a multi-state firm can claim the deduction in a conforming state for production activities in any state, not just the state where the firm is filing.” They also benefit large firms at the expense of small.

State efforts to encourage corporate growth and job creation through the tax code usually encourage a race to the bottom, as corporations play states off each other in order to secure the most preferential treatment, and then feel no hesitation about up and leaving later. Of course, paying corporations to create jobs is only one of the bone-headed ways states try to generate economic activity.

Another conservative myth bites the dust, again. 

Mitt Romney's New Attack Ad is Another Lie (Medicare) Filled With Empty Promises

Mitt Romney's New Attack Ad is Another Lie (Medicare) Filled With Empty Promises

The largest and clearest point of distinction in the presidential race is universal access to health insurance. If President Obama wins reelection, his law to provide access to the uninsured will go forward. If Mitt Romney is elected, it will be gutted, and Medicaid — the bare-bones coverage plan for the most desperately poor and sick — will face enormous additional cuts.

Commonwealth Fund has released a report comparing the stark choice. Estimating conservatively, Romney’s plan — to the extent that the report was able to piece it together — would increase the uninsured population to about 72 million, while Obama’s would cut it to 26 million (his plan does not cover illegal immigrants.) Probably more telling is Romney’s official campaign reaction:

    “Under ObamaCare, Americans have seen their insurance premiums increase, small businesses are facing massive tax increases, and seniors will have reduced access to Medicare services,” Ryan Williams, a Romney spokesman, wrote in an email to POLITICO. “The American people did not want this law, our country cannot afford this law, and when Mitt Romney becomes president he will repeal it and replace it with common-sense, patient-centered reforms that strengthen our health care system.”

Note that the statement is almost entirely an attack on Obamacare, with a brief clause at the end vaguely promising something good will take its place. But that something requires resources. Most people lacking insurance are either sick or have a sick family member or they're poor. If you want to cover them, you need to cough up some money. Obamacare undertook the massive political heavy lift of providing those resources, and that’s what Romney attacks — he included higher taxes on “small businesses” (i.e., people making more than $250,000 a year) and “reduced access to Medicare services” (i.e., cuts in reimbursements to Medicare providers, as a trade-off for providing them with 30 million new paying customers.)

Romney’s budget is premised on denying the government enough resources to fund any kind of universal health insurance program. His promise to cut tax rates by 20 percent would reduce tax revenue well below current levels. But even if you accept Romney’s arithmetically impossible claim that he can cut tax rates by 20 percent and raise the same tax revenue as the tax code does right now (and without raising taxes on the middle class), merely holding revenue at current, Bush-set levels would make any kind of universal coverage impossible.

Both campaigns describe the election as a stark choice, and this is correct. It’s a choice between universal health coverage for legal citizens and preserving the Bush tax cuts.

Only the elite like Romney think they people who make $250k plus per year are middle-class. Half the country has a household income under $52k. If someone making even $150k per year wants to cry that they're struggling, they need to learn some personal finance and spending discipline.

Romney Budget Proposals Would Necessitate Very Large Cuts in Medicaid, Education, Health Research and Other Programs

If Mitt Romney and Paul Ryan had values They Would Stop Their Medicare Lies

If Mitt Romney and Paul Ryan had values They Would Stop Their Medicare Lies

When formulating public policy, evidence should be accorded more weight than ideology, and facts should matter more than shibboleths. The Romney-Ryan plan for Medicare reform depends on assertions that are ideologically consistent. But the Republicans plan is not supported by the evidence and does not survive serious scrutiny.

Perhaps that's why the Romney campaign has been deliberately misrepresenting President Obama's Medicare record.

Mitt Romney characterizes the $716 billion of Medicare savings over the next 10 years, contained in the Affordable Care Act, as President Obama's "raid" on the Medicare program to pay for his health care program. This fear-mongering is simply untrue. These savings result from reforms to slow the growth of Medicare spending per enrollee - there are no cuts in Medicare benefits.

The reforms include both voluntary and mandatory changes in how providers deliver health care to promote better care coordination at lower cost, reward the quality and outcomes of services rather than their volume and reduce fraud and abuse.

For example, the law fosters the creation of accountable-care organizations, i.e., groups of providers willing to accept a flat fee for the integrated care provided to their Medicare patients. Accountable-care organizations represent a major step away from the unsustainable fee-for-service model that rewards the number of procedures rather than the quality of care.

Health experts believe that these organizations will significantly improve care and lower costs not just in Medicare but throughout the health care system. This belief is based on evidence, not ideology.

Medicare beneficiaries will also benefit from reforms that penalize hospitals for preventable re-admissions reflecting complications from previous procedures and that require hospitals to post their rates of medical errors, with penalties for those with the highest rates.

Both Governor Romney and Representative Paul D. Ryan have promised to repeal the Affordable Care Act and with it the reforms behind the $716 billion in Medicare savings (although Mr. Ryan duplicitously counts the savings from these reforms in his deficit-reduction plan). Medicare beneficiaries would be the losers. They would lose the benefits of better care at lower cost. They would lose the plan's expanded Medicare coverage for prevention benefits and prescription drugs, and they would be forced to pay higher premiums and co-pays as a result of faster growth in Medicare costs.

Same on Romney and Ryan for being yet more examples of the moral corruption and anti-Americanism of the Republican party.

Fox Guest Distorts Obama's "Build" Comment Beyond Recognition: "What's He Gonna" Tell Athletes? "You Didn't Earn That Gold Medal?"

Fox Guest Distorts Obama's "Build" Comment Beyond Recognition: "What's He Gonna" Tell Athletes? "You Didn't Earn That Gold Medal?"