The Senate Finance Committee revived a proposal yesterday that died in the House on Crossover Day -- a proposal that eliminates the refundable portion of the Low Income Tax Credit. The Senate could vote on the measure (House Bill 1198) on Wednesday or in the final legislative days next week.
Currently, taxpayers with income below $20,000 are eligible for a tax credit ranging from $5 to $26 for individuals, with additional benefits for the elderly and families with children. If the tax credit exceeds a taxpayer's income tax liability, he or she receives the remaining credit as a refund.
More than one million Georgia taxpayers claimed the Low Income Tax Credit in 2007, receiving $29 million in credits. If legislators eliminate the refundable portion of the credit, they will cut the Low Income Tax Credit by two-thirds, lowering the total credits to low-income Georgians by $21.8 million, according to the fiscal note to the bill.
At the same time, legislators have passed about a half a billion dollars in new tax breaks for corporations and the state's wealthiest individuals. HB 1023 cuts the capital gains tax in half and eliminates the corporate net worth tax ($380 million annually when fully implemented). HB 1055 eliminates the income tax on retirement income for the state's wealthiest seniors ($150 million when fully implemented). These bills await the governor's signature or veto.
Why is the Credit Refundable?
The refundable portion of the Low Income Tax Credit (the portion that exceeds income tax liability) is indended to offset some of the sales tax liability faced by low-income Georgians.
Low-income taxpayers do not have a large income tax liability. Instead, they pay substantial sales taxes because they consume a greater portion of their income than higher income residents do.
Georgians earning less than $16,000 pay 7.8 percent of their income on average in state and local sales and excise taxes; however, Georgians earning $62,000 pay 4.4 percent and those earning over $433,000 pay 0.9 percent on average. Click here for a chart on tax liability by the Institute on Taxation & Economic Policy.
In its current refundable form, the Low Income Credit offsets a small fraction of sales tax liability for low-income taxpayers, making an overwhelmingly regressive tax somewhat less so. Since relief cannot be targeted specifically to low-income taxpayers through the sales tax, it must be done through the income tax.
Are Other Tax Credits Refundable?
The Low Income Tax Credit is not the only refundable credit -- it just happens to be the only one targeted to the very lowest-income taxpayers.
Corporations doing business in Georgia can claim certain tax credits even if they have zero corporate income tax liability. These include the film tax credit, the jobs tax credit, and the headquarters tax credit. A corporation with tax credits in excess of its income tax liability is able to receive the remaining credits by taking the credits against employee payroll withholding.
Here's how it works: Employees have income withheld from their paychecks for state income taxes. That money typically flows to the state. However, if the company has tax credits and no income tax liability to use the credits against, the state allows the corporation to keep the employees' withholding payments in the amount equal to the excess tax credits.
Corporate tax credits taken against payroll withholding (the essentially refundable portion) cost $20.9 million in 2007, nearly matching the cost of the Low Income Tax Credit refunds.
"If lawmakers pursue HB 1198 because they do not believe in refundability for more than one million of Georgia's lowest-income taxpayers, then it follows that they will also need to enact legislation to correct the refundable nature of certain corporate tax credits," said Sarah Beth Gehl, deputy director of the Georgia Budget & Policy Institute.
Conclusion
There is no doubt about the fact that Georgia desperately needs more revenues. However, there are many logical and fair options for seeking revenues, without focusing solely on those taxpayers who have the least ability to afford a tax increase now or after the recession. "Lawmakers should seek either broad-based revenue measures or those targeted at taxpayers with the greatest ability to afford it," said Gehl. Click here for a $450 million option.
Download the Georgia Budget & Policy Institute's analysis of the proposal (which was originally in HB 1219), including a more sensible alternative, here. The Institute on Taxation and Economic Policy has an analysis of the bill as well.
-----
www.fayettefrontpage.com
Fayette Front Page
www.georgiafrontpage.com
Georgia Front Page
Follow us on Twitter: @GAFrontPage
Showing posts with label tax credit. Show all posts
Showing posts with label tax credit. Show all posts
Tuesday, April 20, 2010
Tuesday, February 23, 2010
Senate Jobs Bill Does Not Require that Employers Hire American Workers
/PRNewswire/ -- A $15 billion package of tax credits and exemptions for employers who create new jobs is expected to gain approval by the Senate this week. However, the bill, intended to help millions of unemployed American workers find jobs, includes no verification mechanism to ensure that newly created jobs will actually be filled by legal U.S. workers. Moreover, it does not prevent employers from claiming tax credits and exemptions if the workers they hire are illegal aliens, charges the Federation for American Immigration Reform (FAIR).
The legislation, authored by Senate Majority Leader Harry Reid (D-Nev.), does not require employers to use the federal E-Verify system to ensure that the workers being hired are legally eligible to work in the United States. Under an executive order issued by President Bush and implemented by President Obama, all federal contractors are already required to use E-Verify and the same requirement could easily have be applied to employers claiming tax credits and exemptions. In 2009, Sen. Reid stripped an E-Verify requirement from the $787 billion stimulus package that had been approved by the House when the bill went before a conference committee.
"It is unconscionable that while some 25 million Americans are unemployed or relegated to part-time work, the Senate is refusing to include protections that would guarantee that newly-created jobs are filled by Americans who desperately need them," said Dan Stein, president of FAIR. "The failure to include E-Verify protections in the bill is not an oversight on the part of Sen. Reid. He has consistently blocked efforts to prevent employers who receive government contracts or tax benefits from hiring illegal aliens instead of legal U.S. workers."
Under the Senate legislation, employers who fill newly created jobs with illegal aliens or guest workers would be entitled to the same tax credits and exemptions as employers who hire out-of-work Americans. Even if the employer were subsequently prosecuted for employing illegal aliens, the employer could legitimately claim these tax benefits for hiring them.
Because Sen. Reid has barred any amendments from being considered when the bill goes to the Senate floor, it will be virtually impossible for members to add E-Verify protections for American workers. "The excuse being offered for not including E-Verify in the legislation and barring its inclusion in the final language is laughable," Stein said. "Opponents of inclusion of an E-Verify provision claim it is unnecessary because existing laws already bar employers from hiring illegal aliens. This claim ignores the fact that an estimated 8 million illegal aliens already hold jobs in the U.S.
"Unemployed Americans have a right to expect that they will be the beneficiaries of any jobs created as a result of this bill. American taxpayers who will be footing the bill for this and other legislation have a right to expect that their money will help put Americans back to work," Stein continued. "These expectations could be easily fulfilled by requiring the use of E-Verify and barring employers who do not hire legal U.S. workers from receiving tax benefits - something Reid and Senate Democrats are refusing to do."
-----
www.fayettefrontpage.com
Fayette Front Page
www.georgiafrontpage.com
Georgia Front Page
Follow us on Twitter: @GAFrontPage
The legislation, authored by Senate Majority Leader Harry Reid (D-Nev.), does not require employers to use the federal E-Verify system to ensure that the workers being hired are legally eligible to work in the United States. Under an executive order issued by President Bush and implemented by President Obama, all federal contractors are already required to use E-Verify and the same requirement could easily have be applied to employers claiming tax credits and exemptions. In 2009, Sen. Reid stripped an E-Verify requirement from the $787 billion stimulus package that had been approved by the House when the bill went before a conference committee.
"It is unconscionable that while some 25 million Americans are unemployed or relegated to part-time work, the Senate is refusing to include protections that would guarantee that newly-created jobs are filled by Americans who desperately need them," said Dan Stein, president of FAIR. "The failure to include E-Verify protections in the bill is not an oversight on the part of Sen. Reid. He has consistently blocked efforts to prevent employers who receive government contracts or tax benefits from hiring illegal aliens instead of legal U.S. workers."
Under the Senate legislation, employers who fill newly created jobs with illegal aliens or guest workers would be entitled to the same tax credits and exemptions as employers who hire out-of-work Americans. Even if the employer were subsequently prosecuted for employing illegal aliens, the employer could legitimately claim these tax benefits for hiring them.
Because Sen. Reid has barred any amendments from being considered when the bill goes to the Senate floor, it will be virtually impossible for members to add E-Verify protections for American workers. "The excuse being offered for not including E-Verify in the legislation and barring its inclusion in the final language is laughable," Stein said. "Opponents of inclusion of an E-Verify provision claim it is unnecessary because existing laws already bar employers from hiring illegal aliens. This claim ignores the fact that an estimated 8 million illegal aliens already hold jobs in the U.S.
"Unemployed Americans have a right to expect that they will be the beneficiaries of any jobs created as a result of this bill. American taxpayers who will be footing the bill for this and other legislation have a right to expect that their money will help put Americans back to work," Stein continued. "These expectations could be easily fulfilled by requiring the use of E-Verify and barring employers who do not hire legal U.S. workers from receiving tax benefits - something Reid and Senate Democrats are refusing to do."
-----
www.fayettefrontpage.com
Fayette Front Page
www.georgiafrontpage.com
Georgia Front Page
Follow us on Twitter: @GAFrontPage
Saturday, December 5, 2009
CCH Briefing Details House Estate Tax Measure
/PRNewswire/ -- Following passage by the House of Representatives on December 3, 2009 of the Permanent Estate Tax Relief for Families, Farmers, and Small Business Act of 2009, CCH has issued a Special Tax Briefing on its provisions which, if adopted by the Senate, will provide certainty for estate taxes and estate planning, largely by freezing the status quo as of this year. Read the Briefing at http://tax.cchgroup.com/Legislation/2009-Estate-Tax-Relief.pdf.
"The House bill provides for a $3.5 million estate tax exclusion with no portability, a top estate tax rate of 45 percent, a continuation of stepped-up basis and ratifies the permanent repeal of the state death tax credit," said CCH Senior Estate Planning Analyst Bruno Graziano, JD, MSA.
The measure moves on to the Senate, where the bill's lack of indexing for inflation may pose a difficulty, but many observers believe some kind of estate tax "fix" is imperative this year.
"Without some new legislation in place, 2010 would see the complete abolition of the estate tax - for that year alone - but also a move to a 'modified carryover basis' system for valuing inherited assets that could increase the income tax burden of beneficiaries and would be very difficult for executors and accountants to deal with," Graziano said.
The Briefing also details the impact of the House bill on the gift tax and generation-skipping transfer tax.
CCH Tax Briefings
To read the Briefing, visit http://tax.cchgroup.com/Legislation/2009-Estate-Tax-Relief.pdf. Timely, current analysis of this and other tax legislation can be found at CCH Tax Legislation Coverage (http://tax.cchgroup.com/Legislation/Briefings).
----
www.fayettefrontpage.com
Fayette Front Page
www.georgiafrontpage.com
Georgia Front Page
"The House bill provides for a $3.5 million estate tax exclusion with no portability, a top estate tax rate of 45 percent, a continuation of stepped-up basis and ratifies the permanent repeal of the state death tax credit," said CCH Senior Estate Planning Analyst Bruno Graziano, JD, MSA.
The measure moves on to the Senate, where the bill's lack of indexing for inflation may pose a difficulty, but many observers believe some kind of estate tax "fix" is imperative this year.
"Without some new legislation in place, 2010 would see the complete abolition of the estate tax - for that year alone - but also a move to a 'modified carryover basis' system for valuing inherited assets that could increase the income tax burden of beneficiaries and would be very difficult for executors and accountants to deal with," Graziano said.
The Briefing also details the impact of the House bill on the gift tax and generation-skipping transfer tax.
CCH Tax Briefings
To read the Briefing, visit http://tax.cchgroup.com/Legislation/2009-Estate-Tax-Relief.pdf. Timely, current analysis of this and other tax legislation can be found at CCH Tax Legislation Coverage (http://tax.cchgroup.com/Legislation/Briefings).
----
www.fayettefrontpage.com
Fayette Front Page
www.georgiafrontpage.com
Georgia Front Page
Thursday, January 8, 2009
Georgia Housing Leaders Call on Congress to Help Main Street
(BUSINESS WIRE)--The Georgia housing industry called on Congress January 7 to address the housing crisis that is at the root of the nation’s recession. Rick Porter, owner of Richport Properties, Inc.; Kenny King, president of Kingsland Corp.; and Kurt Cannon, owner of Rabun Builders, Inc. and the president of the Home Builders Association of Georgia, urged Congress to enact bold measures that will stimulate the housing market and, in turn, revive the local, state and national economies.
“Housing is central to our economy and is an engine of production that can lead us out of the recession,” said Porter. “But it is crucial for Congress to enact a major stimulus package to stop the decline in home values, stem the tide of foreclosures, stabilize financial markets and re-ignite consumer demand.”
To get the Georgia economy moving again, the housing industry is urging Congress to support enhancements to the home buyer tax credit and provide below-market, 30-year fixed-rate mortgages for home purchases.
Specifically, the legislation should include:
1. A 10 percent tax credit for all qualified home buyers capped at 3.5 percent of FHA, Freddie Mac or Fannie Mae loan limits (equaling $10,000 to $22,000 depending on geographic market). All primary home purchases through December 31, 2009, would be eligible. Repayment would be required only if the home was sold within three years. And the credit would be available at closing, making it easier for buyers to use it as a downpayment;
2. A below-market, 30-year fixed-rate mortgage for home purchases. The second component of the stimulus plan would provide qualified home buyers with 30-year fixed-rate mortgages at 2.99 percent interest on contracts closed until June 30, 2009 and 3.99 percent interest on closings between June 30 and December 31, 2009; and
3. Continued measures to reduce foreclosures and keep people in their homes.
The housing industry representatives cited a similar plan with both a tax credit and a mortgage rate subsidy that was enacted in 1975 when the nation was also in the midst of a recession. That successful stimulus plan jump-started the depressed economy, and the effects continued in communities across the country long after the measure expired.
“We’ve been in business for about 20 years, and we’re currently working on a project of 23 units which we began back in 2005,” explained Kenny King, president of Kingsland Corp., out of Snellville. “In all my years in home building, this project is probably our best product in our best location, but in this market, we can’t turn the units over. We sold three in 2007, and only four in 2008 – we’ve got 16 left and we don’t know how we’ll sell them. Consumer confidence is basically ‘zero.’ We need stability and confidence brought back to the housing market to end this extended recession.”
Kurt Cannon, owner of Rabun Builders, Inc., from Clayton, and the current president of the Home Builders Association of Georgia, builds second-home and retirement properties. “Our business is basically just shutting down. Last year we only did 25 percent of what we should have done, and now we are finishing up projects without any others lined up. Over the past three months, I’ve talked to between 70 and 80 builders around the area, and I keep hearing the same story over and over again. Builders with high credit ratings, with decades of good credit, current on their payments, are suddenly told by their banks that they have to pay off their loans in 10 days or the bank will foreclose. Of course, they end up foreclosing and the bank just ‘fire-sales’ the neighborhood. It’s the same story all around. We must stop the bleeding.”
“When the housing industry is in a crisis, the entire community is affected,” continued Porter. “Retailers, manufacturers, service providers and even the local government are affected. Most important, local residents suffer.”
“Three million home building-related jobs across the country have been lost as a result of the slowdown in housing production, which represents $145 billion in lost wages and $4.9 billion in lost purchases,” said National Association of Home Builders (NAHB) economist Bernard Markstein. “Deterioration in these jobs has now spilled over into virtually all sectors of the U.S. job market and the economies of states like Georgia.”
"We are leaving no stone unturned in our efforts to convince Congress to quickly enact a robust housing stimulus program. There’s no question that stopping the decline in home values and restoring demand for housing is the fastest and most effective way of reviving the economy," Porter said.
The housing leaders in Georgia are part of a new coalition called Fix Housing First, consisting of more than 600 organizations, home building companies and manufacturers advocating for this major stimulus package to stem the decline in home values, stabilize financial markets and re-ignite consumer demand. To learn more about Fix Housing First, go to www.fixhousingfirst.com.
-----
www.georgiafrontpage.com
Georgia Front Page
www.fayettefrontpage.com
Fayette Front Page
Community News You Can Use
Fayetteville, Peachtree City, Tyrone
“Housing is central to our economy and is an engine of production that can lead us out of the recession,” said Porter. “But it is crucial for Congress to enact a major stimulus package to stop the decline in home values, stem the tide of foreclosures, stabilize financial markets and re-ignite consumer demand.”
To get the Georgia economy moving again, the housing industry is urging Congress to support enhancements to the home buyer tax credit and provide below-market, 30-year fixed-rate mortgages for home purchases.
Specifically, the legislation should include:
1. A 10 percent tax credit for all qualified home buyers capped at 3.5 percent of FHA, Freddie Mac or Fannie Mae loan limits (equaling $10,000 to $22,000 depending on geographic market). All primary home purchases through December 31, 2009, would be eligible. Repayment would be required only if the home was sold within three years. And the credit would be available at closing, making it easier for buyers to use it as a downpayment;
2. A below-market, 30-year fixed-rate mortgage for home purchases. The second component of the stimulus plan would provide qualified home buyers with 30-year fixed-rate mortgages at 2.99 percent interest on contracts closed until June 30, 2009 and 3.99 percent interest on closings between June 30 and December 31, 2009; and
3. Continued measures to reduce foreclosures and keep people in their homes.
The housing industry representatives cited a similar plan with both a tax credit and a mortgage rate subsidy that was enacted in 1975 when the nation was also in the midst of a recession. That successful stimulus plan jump-started the depressed economy, and the effects continued in communities across the country long after the measure expired.
“We’ve been in business for about 20 years, and we’re currently working on a project of 23 units which we began back in 2005,” explained Kenny King, president of Kingsland Corp., out of Snellville. “In all my years in home building, this project is probably our best product in our best location, but in this market, we can’t turn the units over. We sold three in 2007, and only four in 2008 – we’ve got 16 left and we don’t know how we’ll sell them. Consumer confidence is basically ‘zero.’ We need stability and confidence brought back to the housing market to end this extended recession.”
Kurt Cannon, owner of Rabun Builders, Inc., from Clayton, and the current president of the Home Builders Association of Georgia, builds second-home and retirement properties. “Our business is basically just shutting down. Last year we only did 25 percent of what we should have done, and now we are finishing up projects without any others lined up. Over the past three months, I’ve talked to between 70 and 80 builders around the area, and I keep hearing the same story over and over again. Builders with high credit ratings, with decades of good credit, current on their payments, are suddenly told by their banks that they have to pay off their loans in 10 days or the bank will foreclose. Of course, they end up foreclosing and the bank just ‘fire-sales’ the neighborhood. It’s the same story all around. We must stop the bleeding.”
“When the housing industry is in a crisis, the entire community is affected,” continued Porter. “Retailers, manufacturers, service providers and even the local government are affected. Most important, local residents suffer.”
“Three million home building-related jobs across the country have been lost as a result of the slowdown in housing production, which represents $145 billion in lost wages and $4.9 billion in lost purchases,” said National Association of Home Builders (NAHB) economist Bernard Markstein. “Deterioration in these jobs has now spilled over into virtually all sectors of the U.S. job market and the economies of states like Georgia.”
"We are leaving no stone unturned in our efforts to convince Congress to quickly enact a robust housing stimulus program. There’s no question that stopping the decline in home values and restoring demand for housing is the fastest and most effective way of reviving the economy," Porter said.
The housing leaders in Georgia are part of a new coalition called Fix Housing First, consisting of more than 600 organizations, home building companies and manufacturers advocating for this major stimulus package to stem the decline in home values, stabilize financial markets and re-ignite consumer demand. To learn more about Fix Housing First, go to www.fixhousingfirst.com.
-----
www.georgiafrontpage.com
Georgia Front Page
www.fayettefrontpage.com
Fayette Front Page
Community News You Can Use
Fayetteville, Peachtree City, Tyrone
Subscribe to:
Posts (Atom)