The lead National section story in Wednesday's New York Times by Michael Cooper was an odd choice, hitting President Obama from the left on a rather obscure newly established tax break not even liberal economists have found much fault with: “A Tax Cut May Carve Into Budgets Of 19 States.” Cooper melodramatically fretted that it "could blow a hole in state budgets."
Included in the tax-cut package Obama signed in December extending the Bush tax cuts, was legislation allowing businesses to deduct the full value of new equipment from their taxes immediately. Cooper found fault:
Struggling states could lose as much as $5.3 billion in tax collections during the next few years in an unintended consequence of one of the lower-profile federal tax cuts that President Obama signed in December, according to a report released Tuesday.
The tax-cut package the president signed in December is best known for extending the Bush-era tax rates for two years and giving a one-year payroll tax cut to most Americans. But it included a business tax cut that could blow a hole in state budgets: a provision allowing businesses to deduct the full value of new equipment purchases from their taxes through 2011.
That cut, intended to spur the economy by encouraging businesses to spend more money on equipment, could end up costing 19 states as much as $5.3 billion in lost revenue over the next few years, according to the report, by the Center on Budget and Policy Priorities, a research organization based in Washington.
The 19 states stand to lose money because they link their state tax laws to federal tax law. So the newly allowed federal tax deductions that businesses in those states take will lower their taxable incomes, which would in turn have the effect of driving down state corporate and income tax collections.
Nowhere in the ten-paragraph story does the Times quote an opposing source making a case for the tax break as a job creator.