Monday, February 28, 2011

States Seek To Manage The Cost Of Tax Credits In The Current Economic Environment

State governments see the need to contain expenditures in order to balance their budgets. While a variety of approaches have been adopted, the states' efforts nevertheless are constrained by political realities. With regard to tax credits and other incentives, data is available from tax filings, specific incentive reporting requirements, economic development agencies, and other sources. The information is compiled and analyzed, with the resulting reports provided to government officials and made available to the public. Based on those reports—or simply due to a state's financial circumstances—states have enacted deferrals or reductions for a variety of tax credits. Changes have occurred also with regard to data collection and expenditure reporting. These trends will continue and accelerate as competition for state funds becomes more intense. Even as the economy rebounds, the reporting and review infrastructure created over the past few years will likely remain, and the scrutiny over tax credits and other tax expenditures will continue. (R. Weiss, 20 Journal of Multistate Taxation and Incentives, No. 10, 6 (February 2011).)

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