Business Facilities - December 2007 - (Page 7)

TAX RELIEF OR TAX SHIFT? In November, the House of Representatives approved the Temporary Tax Relief Act of 2007 by a vote of 216 to 193. The sixpart document contains various one-year extenders of expiring tax provisions, affecting both individuals and businesses, plus a oneyear patch of the federal alternative minimum tax (AMT) that prevents it from affecting more individuals and businesses than it otherwise would. The act has polarized legislators, and businesses are tracking its development. The U.S. Chamber of Commerce describes the bill as a relief for individual taxpayers, but it says the bill shifts the tax burden onto businesses by raising taxes on carried interest, for example. The chamber’s executive vice president for Government Affairs, Bruce Josten, supports many provisions outlined in the tax bill, but notes, “These provisions should not be paid for with onerous new taxes on American workers and businesses.” In contrast, House Speaker Nancy Pelosi believes the act will protect 23 million middle-class families from the AMT and will provide 30 million homeowners with property tax relief. Regarding business, the act will close loopholes that allow “the privileged few on Wall Street” to pay a lower income tax rate and will prevent CEOs and hedge fund managers from setting up unlimited retirement accounts at offshore locations with favorable tax laws. The bill must still pass a Senate vote and avoid a presidential veto to become law. SNAPSHOTS SECONDS with Scott Hodge, President, The Tax Foundation S cott Hodge is the president of The Tax Foundation, a nonpartisan tax research group based in Washington, DC. Hodge has sparked federal and state tax discourse through his campaigning and publishing efforts. He has written and edited three books, authored over 100 studies on tax policy, penned dozens of opinion pieces for news publications, and conducted over 600 radio and television interviews. Hodge has worked with Citizens for a Sound Economy, The Heritage Foundation, and the Heartland Institute. BF: How do you define a good business tax climate? Is it more complicated than “lower tax is better?” Hodge: Low rates are certainly good, but they’re not everything. Whether a rate is high or low, it will be unfair and inefficient if the tax base is riddled with credits, deductions, and exemptions. Also, we don’t just count as a “business” tax those payments that business owners mail in. Wage taxes paid by employees matter to business, and sales taxes paid by customers affect business. So, we measure the tax rates and base provisions of the corporate tax, the individual income tax, the sales tax, the property tax, and the unemployment insurance tax. States whose taxes in these areas have low rates and broad bases do best in our survey. BF: What would be the single easiest thing for a state to do to move up in the ranking next year? Hodge: It depends on the state, but generally, repealing one tax that businesses pay would be the fastest way to shoot up the list. Dollar for dollar of revenue, repealing beats rate-cutting because it saves the administrative cost as well. What to repeal? Best would be a discredited, economically damaging tax like a gross receipts tax. Cutting tax rates certainly can help as well. A state can even move up the ranking by making no changes. That’s not a proactive approach, but a state that stands still may well bypass a state that foolishly tries to buy the good wishes of specific firms and industries with targeted credits, which usually leads to higher tax rates on everyone else. 2008 STATE BUSINESS TAX CLIMATE INDEX BEST OVERALL BUSINESS TAX CLIMATE 1. Wyoming 2. South Dakota 3. Nevada BEST SALES TAX 1. New Hampshire 2. Delaware 3. Montana BEST PROPERTY TAX 1. New Mexico 2. Idaho 3. Utah SOURCE: THE TAX FOUNDATION BEST UNEMPLOYMENT INSURANCE TAX 1. Oklahoma 2. Florida 3. Arizona BEST CORPORATE TAX (TIE) 1. Nevada South Dakota Wyoming BEST INDIVIDUAL INCOME TAX (TIE) 1. Alaska South Dakota Florida Washington Nevada Wyoming BUSINESS FACILITIES 7

Table of Contents Feed for the Digital Edition of Business Facilities - December 2007

Business Facilities - December 2007 Contents First Word Snapshots Metro Spotlight: Albuquerque, New Mexico Corporate Moves: North Carolina 2007 Ecomonic Development Deal of the Year Awards State of the Year Seeking Supply Chain Solutions Mississippi Means Business Corporate Moves: South Carolina Biomedical Momentum in Florida's High Tech Corridor Trends in Offshoring Metro Spotlight: Stillwater, OK Metro Spotlight: Atlanta, GA Advertiser Information 2007 Salary Survey

Business Facilities - December 2007

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