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The Trump tax plan simplifies the tax structure but reduces revenue by $ trillion. Trump signed the Tax Cuts and Jobs Act. It cuts individual income tax rates, doubles the standard deduction, and eliminates personal exemptions. The Act created the following chart. .. Republicans: Which Is Better for the Economy?.
Table of contents

President Obama firmly believes that entrepreneurs and small businesses are engines of economic growth, and that their investments and innovation have been at the forefront of our economic recovery. These tax cuts have helped small businesses hire and grow, provide affordable health insurance to employees, and invest in new machinery and equipment. The President also believes we should be doing more to help our small businesses succeed in a changing economy.

As part of his Framework for Business Tax Reform , the President has proposed additional tax relief, while greatly simplifying tax filing for small businesses, including:. Despite the progress that has been made, middle-class families today still bear too much of the tax burden because of unfair loopholes that are only available to the wealthy and big corporations.

In his State of the Union Address, the President proposed a plan to simplify our complex tax code for individuals, make it fairer by eliminating some of the biggest loopholes, and use the savings to responsibly pay for the investments we need to help middle-class families get ahead and grow the economy. In addition, the President has put forward a robust framework for fixing the business tax system that is aimed at promoting growth and job creation here in the United States and that ends loopholes that reward companies for moving jobs and profits overseas. We have to set priorities.

If we want a strong middle class, then our tax code must reflect our values. President Obama. Learn more about the bipartisan agreement making these important expansions permanent. Bipartisan legislation permanently kept income tax rates low for 98 percent of Americans, while asking the wealthiest households to pay more to help reduce the deficit, including by restoring top tax rates to their levels under President Clinton, and restoring limits on deductions for high-income taxpayers.

Learn more about the American Taxpayer Relief Act of Who pays the estate tax? How many people pay the estate tax? What is the difference between carryover basis and a step-up in basis? How could we reform the estate tax? How should wealth be taxed? What is an inheritance tax? Payroll Taxes What are the major federal payroll taxes, and how much money do they raise? What is the unemployment insurance trust fund, and how is it financed? What are the Social Security trust funds, and how are they financed? Are the Social Security trust funds real? What is the Medicare trust fund, and how is it financed?

Excise Taxes What are the major federal excise taxes, and how much money do they raise?


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What is the Highway Trust Fund, and how is it financed? Taxes, Energy, and the Environment What tax incentives encourage energy production from fossil fuels? What tax incentives encourage alternatives to fossil fuels? What is a carbon tax? Business Taxes How does the corporate income tax work? What are pass-through businesses? How are pass-through businesses taxed?

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Is corporate income double-taxed? Tax Incentives for Economic Development What is the new markets tax credit, and how does it work? What are Opportunity Zones and how do they work?


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Taxes and Multinational Corporations How does the current system of international taxation work? What are the consequences of the new US international tax system? How does the tax system affect US competitiveness? How would formulary apportionment work? What are inversions, and how will TCJA affect them? What is a territorial tax and does the United States have one now? What is the TCJA repatriation tax and how does it work?

What is the TCJA base erosion and anti-abuse tax and how does it work? What is global intangible low-taxed income and how is it taxed under the TCJA? What is foreign-derived intangible income and how is it taxed under the TCJA? Comprehensive Tax Reform What is comprehensive tax reform? What are the major options for comprehensive tax reform? Broad-Based Income Tax What is it a broad-based income tax? What would and would not be taxed under a broad-based income tax?

What would the tax rate be under a broad-based income tax? National Retail Sales Tax What is a national retail sales tax? What would and would not be taxed under a national retail sales tax? What would the tax rate be under a national retail sales tax? What is the difference between a tax-exclusive and a tax-inclusive sales tax rate? Who bears the burden of a national retail sales tax? Would tax evasion and avoidance be a significant problem for a national retail sales tax?

What would be the effect of a national retail sales tax on economic growth? What transition rules would be needed for a national retail sales tax? Would a national retail sales tax simplify the tax code?

How Tax Cuts Stimulate the Economy

What has been the state and local experience with retail sales taxes? What is the experience of other countries with national retail sales taxes? How would a VAT be collected? What would be taxed under a VAT? What would the rate be under a VAT? What is the difference between zero rating and exempting a good in the VAT? Who would bear the burden of a VAT? Is the VAT a money machine? How would small businesses be treated under a VAT?

What is the history of a VAT? How are different consumption taxes related? Other Comprehensive Tax Reforms What is the flat tax? What is the X-tax? What are the benefits of return-free tax filing? What are the drawbacks of return-free tax filing? How would the tax system need to change with return-free tax filing? Who would qualify for return-free tax filing?

Would return-free tax filing raise taxes? What was the experience in California with return-free tax filing? What other countries use return-free tax filing? What are the sources of revenue for local governments? Specific State and Local Taxes How do state and local individual income taxes work? How do state and local sales taxes work? How do state and local property taxes work? How do state and local corporate income taxes work?

How do state estate and inheritance taxes work? How do state earned income tax credits work? How do state and local severance taxes work? How do state and local soda taxes work? How do marijuana taxes work? Fiscal Federalism and Fiscal Institutions How does the deduction for state and local taxes work?

What are municipal bonds and how are they used? What types of federal grants are made to state and local governments and how do they work? However, no tax credits may be issued for job retention projects approved by the Department after August 30, Operative Jan. The incentives include a total or partial refund of sales and use taxes Sec. For more information on the Nebraska Advantage Act, please click here. The Nebraska Advantage Act sets out six tiers of investment, hiring and wage criterion that determine which incentives are available to a given taxpayer. The credit amount is determined by which of the six tiers of investment, hiring and wage criterion a taxpayer meets.

Tier 1 incentives include:. Tier 2 incentives include:. Tier 3— To qualify for Tier 3 incentives, a qualified business must hire at least 30 new employees. Tier 3 incentives include:. Tier 4 incentives include:. Tier 5 incentives include:. Tier 6 incentives include:. There shall be no new project applications for benefits under Tier 1 and Tier 3 filed after Dec.

Agreements may be executed with regard to completed project applications filed on or before Dec. Agreements may be executed with regard to completed project applications filed before Jan. New Hampshire taxpayers may claim a credit against the business enterprise and the business profits taxes for creating new jobs in Coos County. However, the credit cannot be claimed if the job is eliminated. I This tax credit shall not apply to any tax period ending after Dec. After being initially granted, the credit is renewable for four consecutive additional years, provided that no additional tax credit shall be granted for any tax period after Dec.

Unused credits may be carried forward for up to five years. A credit is allowed against the corporation business tax to taxpayers making qualified investments in new or expanded business facilities that result in new jobs, provided the number and compensation of the new jobs meet minimum requirements. The credit is allowed against the portion of the corporation business tax attributable to and a direct consequence of the investment. The investment of other taxpayers must result in the creation of at least 50 new jobs, with a median annual compensation of the threshold amount established for the particular tax year.

The maximum credit allowed is equal to the amount of the taxpayer's qualified investment multiplied by the taxpayer's new jobs factor. The credit is taken in five equal annual installments N. The credit may not reduce the corporation business tax liability by more than 50 percent of that portion of the tax, and may not reduce the tax below the minimum tax. A business subject to the corporation business tax and conducted at a location within a project associated with the New Jersey Urban Development Corporation is entitled to a credit against the entire net income component of the tax for each new employee at that location who is a resident of the municipality in which the project is located and who, immediately prior to employment by the taxpayer, was unemployed for at least 90 days or was dependent upon public assistance as their primary source of income.

The project must be located in a qualified municipality and the business must consist primarily of manufacturing or other business that is not retail or warehousing oriented. A refundable credit is available against an eligible employer's New Mexico "modified combined tax liability" for each new high-wage, economic-based job created. A taxpayer that qualifies for an investment tax credit ITC other than at the pre optional rate applicable to research and development property with respect to property the acquisition, construction, reconstruction, or erection of which commenced after is allowed an additional credit, the employment incentive credit EIC , for each of the two tax years succeeding the year in which the ITC credit is allowed.

The EIC is computed as follows: 1 1. The determination of whether a business is operating predominantly in a specified industry will be based solely on the activity at the project location, without regard to operations at other locations in the state. However, only certain categories of businesses are eligible to also apply for the real property tax credit.

Specifically, the real property tax credit is available to firms locating in certain distressed areas i. For more information on the Excelsior Jobs Program, please click here and here. Jobs component— A participant in the program is eligible to claim a credit for each net new job created in the state. The amount of the credit per job is equal to the product of gross wages and 6. The credit is equal to 2 percent of the cost or other basis for federal income tax purposes of the qualified investment.

The investment component may not be claimed until a participant has received a certificate of tax credit; however, qualified investments made after the issuance of the certificate of eligibility, but before the issuance of the certificate of tax credit, may be claimed in the first taxable year for which the participant is allowed to claim the credit. Expenses incurred prior to the date when the certificate of eligibility is issued are not eligible to be included in the calculation of the credit.

In the first year, the credit equals 50 percent of the eligible real property taxes on the real property comprising the regionally significant project or located in the investment zone. The credit then phases down from 50 percent to 5 percent over the year period 5 percent each year.

To be eligible for the Economic Transformation and Facility Redevelopment Program tax credit, the taxpayer must meet all the following requirements. The taxpayer must be a participant or the owner of a participant in the economic transformation and facility development program. The commissioner of economic development must have issued a certificate of to the taxpayer or to an entity in which the taxpayer is an owner. A copy of the certificate is required to be attached to the taxpayer's report or return. The taxpayer or the entity in which the taxpayer is an owner must be a qualified new business.

The taxpayer or the entity in which the taxpayer is an owner must create and maintain at least five net new jobs in the economic transformation area. The benefit period for the tax credits is five consecutive taxable years, beginning with the first taxable year in which the five net new jobs are created. However, in no event may that benefit period start later than two years after the certificate of eligibility is issued. If, in any year of the benefit period, the taxpayer fails to maintain the required level of five net new jobs measured quarterly , the taxpayer will not be allowed a credit for that year.

Such failure to be allowed a credit will not extend the taxpayer's benefit period. Art 1, Sec. Jobs tax credit component — 6. Real property tax credit component RPTC — 50 percent of real property taxes for projects located entirely within the grounds of a closed facility, declining by 10 percent a year; 25 percent of real property taxes for projects elsewhere in an ETA, declining by 5 percent a year. The credit may be claimed against any one of the taxes listed or a combination thereof. Credit carry forwards may be divided between the taxes against which it is allowed without regard to the original election specifying the division of the credit.

To qualify, a taxpayer must create the following number of new jobs, depending upon which development tier the taxpayer's business is located in: 1 15 jobs if the business is located in a development tier-three area; 2 10 jobs if the taxpayer is located in a development tier-two area; and 3 five jobs if the taxpayer is located in a development tier-one area, urban progress zone, agrarian growth zone, or beginning with the tax year, a port enhancement zone.

Jobs transferred from within the state, either from the taxpayer's own business or from a related member, are not considered new jobs for purposes of this credit. In addition, if the job is transferred to a different level tier or into or out of an urban progress zone or agrarian growth zone, the amount of the remaining installments may need to be recalculated. Taxpayers that cease to engage in a qualifying business activity after they have claimed the credit, may no longer claim any remaining installments of the credit but are not required to pay back any previously claimed installment.

This also applies to corporate headquarters that no longer meet the job creation threshold requisite criteria. However, the credit is subject to recapture, plus interest, if the taxpayer was ineligible to claim the credit at the time the credit was initially claimed or if a final determination unfavorable to the taxpayer with respect to an environmental disqualifying event is made that is applicable to the year in which the activity occurred for which the credit was claimed. This credit is repealed for business activities that occur on or after Jan. For more information on the Credit for Creating Jobs, please click here and here.

The credit must be taken in four equal installments beginning in the taxable year after the taxable year the new job is created. The credit is contingent upon maintaining the employee in the job for the full four years. If the taxpayer fails to maintain the jobs over the full four-year period, the taxpayer may no longer claim any future installments. The credit must be claimed within six months of the deadline for filing the return, including extensions.

The total amount of all Article 3J credits credits for jobs creation, business property investment and real property investment , including carryovers, may not exceed 50 percent of the cumulative amount of taxes against which they may be claimed for the taxable year, reduced by the sum of all other credits allowed against those taxes, except tax payments made by or on behalf of the taxpayer.

Unused credit may be carried forward for the succeeding five years. Beginning with the taxable year, taxpayers allowed the federal work opportunity credit may claim a portion of the credit against North Carolina corporate income tax. However, this credit expires on Jan.

Fore more information on the Work Opportunity Tax Credit, please click here. The nonrefundable credit is equal to 6 percent of the federal credit allowed for wages paid during the taxable year for positions located in North Carolina. Workforce Recruitment Credit for Hard-to-Fill Employment Positions North Dakota employers are entitled to a credit for costs incurred during the tax year to recruit and hire employees for hard-to-fill employment positions for which the annual salary meets or exceeds the state average wage. For more information on the Workforce Recruitment Credit, please click here.

The credit amount equals 5 percent of the salary paid for the first 12 consecutive months to the employee hired for the position. The taxpayer can claim the credit in the first tax year beginning after the employee has completed the first 12 consecutive months of employment. Unused credits can be carried forward for up to four taxable years. A taxpayer may claim a refundable corporation franchise tax credit for new full-time jobs created pursuant to an agreement with the Tax Credit Authority.

Under the agreement, the taxpayer is required to maintain operations at the project location for at least the greater of seven years or the term of the credit plus three years. Credits are available for up to 75 percent of withheld state income taxes. Ohio Job Creation Tax Program Summary The term of the tax credit shall not exceed 15 years, and the first taxable year, or first calendar year that includes a tax period, for which the credit may be claimed. However, credits will no longer be granted as of Jan. Credits are available for up to 75 percent of withheld state income taxes for up to 15 years.

In determining the percentage and term of the credit, the tax credit authority shall consider both the number of full-time equivalent employees and the value of the capital investment project.

Job Creation Tax Credits

The credit amount may not be based on the income tax revenue for a calendar year before the calendar year in which the tax credit authority specifies the tax credit is to begin, and the credit shall be claimed only for the taxable years or tax periods specified in the eligible business' agreement with the tax credit authority. In no event shall the credit be claimed for a taxable year or tax period terminating before the date specified in the agreement.

For each calendar period beginning prior to Jan. The credit is allowed only to reduce the first one-half of any tax remaining after allowance of the credits that precede it.

Economics of the Tax Cuts and Jobs Act (Tax Foundation University 2018: Lecture 1)

No credit shall be allowed against the second one-half of such remaining tax. Qualifying taxpayers must have filed a report with the Tax Commissioner prior to July 1, For more information on the Commercial Activity Tax Credit, please click here. The credit shall not exceed percent of the taxpayer's liability. An income tax credit may be allowed to businesses that have a net increase in the number of full-time equivalent employees, including employees providing support services, who are engaged in computer services, data processing, or research and development in Oklahoma.

The number of new employees is determined by comparing the monthly average number of full-time employees subject to Oklahoma withholding tax for the final quarter of the tax year with the corresponding period of the prior tax year. The business must offer basic health insurance coverage to all employees whose pay is included in the new payroll figures.

At least 80 percent of the new employees must work at least 30 hours per week. All new jobs must reach an average equal to the average county wage where the project is located. The program provides quarterly cash payments of up to 5 percent of new taxable payroll directly to qualifying companies, for up to ten years.

Companies that have been awarded a U. Department of Defense Contract may receive quarterly cash payments of up to 6 percent. Small Employer Quality Jobs Program Small businesses of 90 employees or less that generate at least 75 percent of their sales to out-of-state customers, in qualified industries are eligible to receive cash payments based on the salaries of new jobs that are created, upon entering into a contract with the Oklahoma Department of Commerce. The program also covers specified service companies that generate 75 percent of their sales out-of-state.

Companies is specified industries have up to 36 months to create the minimum number of new jobs required. New employees must be paid between percent to percent of the average county wage in which the job will be located. For counties with a personal poverty rate above 15 percent and an unemployment rate above 10 percent, new employees must be paid percent of the average county wage.

New employees must also be offered basic health insurance within 12 months of employment and the employee cannot pay more than 50 percent of their healthcare premium. The program provides quarterly cash payments of up to 5 percent of new taxable payroll directly to qualifying companies, for up to seven years. The 21st Century Oklahoma Quality Jobs Program Companies engaged in qualified industries that generate at least 75 percent of their sales to out-of-state customers, are eligible to receive cash payments based on the salaries of new jobs that are created, upon entering into a contract with the Oklahoma Department of Commerce.

This program also covers specified service companies that generate 50 percent of their sales out-of-state. New employees must be paid an average annual wage equal to or exceeding the lower of percent of the average of Oklahoma county wages or percent of the average county wage for the county in which the applicant is located. After the first 12 quarters or until the company creates 10 new jobs, the credit is equal to up to 10 percent of new taxable payroll.

Prior to meeting these levels, the net benefit rate is equal to up to 7 percent. The prime contractor must perform at least 8 percent of the work on the federal contract, but not necessarily in the State of Oklahoma. The net benefit rate ranges from. The credit is equal to 10 percent of the compensation paid to an engineer during the first five years of employment, if the employee graduated from a college in Oklahoma. The credit is equal to 5 percent of the compensation if the employee graduated from a college outside of Oklahoma.

The graduate must have attended a qualified program at a public university in Oklahoma. The Job Creation Tax Credit is available against the corporate net income, capital stock and franchise, personal income, insurance gross premiums, utilities gross receipts, bank shares, title insurance and trust company shares, and mutual thrift institutions taxes, for any employer who creates at least 25 new jobs or increases the number of employees by at least 20 percent within three years.

The new jobs must be at the average hourly rate, excluding benefits, of at least percent of the Federal minimum wage. The number of new jobs created in a year is the number by which the taxpayer's average employment per quarter exceeds the taxpayer's average employment per quarter in the previous year. An employer who participates in the Bonus Program is entitled to a tax credit for hiring former public assistance recipients who agree to forego all benefits and return to full-time employment. Laws, Sec. Qualifying businesses may claim a credit against corporate income, personal income, insurance premiums and bank taxes for creating and maintaining at least 10 new jobs at a new or expanded facility in South Carolina.

Code The credit is first claimed in the second year after the new job has been created. The credit is not available to a taxpayer in any year in which the taxpayer's net employment increase falls below 10 or below two for businesses with 99 or fewer employees.

If a corporation adds additional new full-time jobs during the initial five-year period, then it can claim credits for those jobs for five years following the year in which the jobs were created. A single site is a stand-alone building, regardless of whether several stand-alone buildings are located in one geographical location.

Qualifying businesses include manufacturing facilities, tourism facilities, processing facilities, warehousing facilities, distribution facilities, research and development facilities, corporate office facilities, qualifying service-related facilities,extraordinary retail establishments, agribusiness operations, qualifying technology intensive facilities and retail facilities and service-related industries located in the least-developed counties. Code For more information on the Job Tax Credit, please click here. Businesses operating in a business or industrial park jointly established and developed by a qualified group of counties pursuant to Sec.

The additional credit is available for five years, beginning in the tax year following the creation of the job.

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Code The credit may not exceed 50 percent of a taxpayer's annual tax liability. Code Unused credits may be carried forward for up to 15 years. A taxpayer creating and maintaining at least full-time new jobs at a manufacturing, processing, warehousing, distribution, research and development, corporate office, tourism, extraordinary retail establishment, qualifying technology intensive facility, or qualifying service-related facility may petition for a moratorium on corporate income taxes or insurance premium taxes for the 10 taxable years beginning the first full taxable year after the taxpayer qualifies and ending either 10 years from that year or the year when the taxpayer's number of full-time new jobs falls below , whichever is earlier.

Code To qualify for the moratorium, a taxpayer must create at least full-time new jobs at a facility in a county:. Code, and invest at least 90 percent of its total investment in South Carolina in one or both of these counties: 1 county with an average annual unemployment rate of at least twice the state average during each of the last two completed calendar years, based on the most recent unemployment rates available, or that is one of the three lowest per capita income counties, based on the average of the three most recent years of available average per capita income data, 2 county with an average annual unemployment rate of at least twice the state average during each of the last two completed calendar years, based on the most recent unemployment rates available, or that is one of the three lowest per capita income counties, based on the average of the three most recent years of available average per capita income data.

The moratorium is available on the portion of the taxpayer's corporate income tax liability that represents the ratio of the company's new investment in the qualifying county to its total investment in South Carolina. Code For a taxpayer who creates and maintains at least new full-time jobs within five years from the date that the taxpayer creates the first full-time new job at the facility, the moratorium is for 15 years or until the taxpayer's number of full-time new jobs falls below , whichever is earlier.

A taxpayer can claim a credit against the corporate income or insurance premiums taxes for a percentage of the wages of employees who had received Family Independence AFDC payments for three months immediately prior to becoming employed by the taxpayer. Code Qualified employees must be employed under the same terms as other employees. An employer must make health insurance coverage available to qualified employees. However, the employer is not required to pay for all or part of a qualified employee's health insurance coverage if the employer does not pay for all or part of the coverage for its other employees.

The credit is not available if another employee was terminated or forced to resign in order to hire the former Family Independence AFDC payment recipient for the purpose of obtaining the tax credit. The credit amount is: 1 20 percent of the wages paid for each full month of employment during the first 12 months of employment; 2 15 percent of the wages paid for each full month of employment during the second 12 months of employment; and 3 10 percent of the wages paid for each full month of employment during the third 12 months of employment. Unused credits may be carried forward for up to 15 years.

A qualified business that has met the minimum job creation and capital investment requirements provided in a revitalization agreement with the state may claim a job development credit against its personal income tax withholding liability for new jobs created in South Carolina. To qualify for the credit, the taxpayer must create at least 10 new jobs within five years of the effective date of the revitalization agreement.