Tax Break

How well do states monitor the impact of corporate tax breaks?

The first study of how well states assess the performance of companies receiving taxpayer subsidies came out on Wednesday. The picture it paints is not a pretty one for taxpayers.

The good news in “Money-Back Guarantees for Taxpayers is that 215 of 238 state subsidy programs require some form of reporting on whether performance promises are met, while 23 do not. The programs are usually meant to create jobs or help states to retain them.

The bad news is that of the 215 programs with performance reporting requirements, 67 or nearly a third, do not require any verification of assertions that jobs were created or retained, or that some other promised action was taken.

Worse yet is that while 178 subsidy programs contain a penalty provision for falling short, nearly half of those, 84, let state officials waive these clawback penalties.

The 69-page study is the third in a series on jobs subsidies by Good Jobs First, a union-friendly research organization in Washington that gets 92 percent of its $1.1 million annual budget from foundation grants and less than four percent from unions.

Impact of Obama Jobs Panel’s Tax Advice Likely Limited

President Barack Obama’s corporate “Jobs Council,” a who’s who of corporate titans including General Electric chairman Jeff Immelt and luminaries from American Express and Facebook said in a report on Tuesday they recommended  . . .  cutting corporate tax rates.

Perhaps unsurprising, given the vast majority of the panel are corporate officers — also on the committee are union umbrella AFL-CIO president Richard Trumka, and Roger Ferguson, chief executive of TIAA-CREF, one of the biggest providers of U.S. pension funds — but also unlikely to  have much impact, despite the big names behind it.

The council called on lawmakers and the president to begin work “immediately” on corporate tax reform.

The tax code ‘ambiguous’? Supreme Court to decide

A $6 million tax bill landed before the Supreme Court on Tuesday, leaving the justices to determine the will of Congress and the high court’s own decisions from more than 50 years ago. (See the Reuters  preview here.)

The case centers on a law from 1954 in which Congress granted the Internal Revenue Service an extended statute of limitations to ferret out tax cheats when the taxpayer “omits from gross income” more than 25 percent of his or her tax liability.

The tax shelter at issue – known as Son of Boss transaction – claimed fake tax losses, or an “overstatement of basis.”