Iowa is once again funneling taxpayer dollars to the film industry. The Tax Update Blog has been following this gripping tale of corruption, celebrities, and nine-figure price tags since day one:
The film program collapsed in scandal last fall, and the film office director and two filmmakers face criminal charges. Iowa is on the hook for $200 million for credits already committed -- about $66 per Iowan.
Because of this scandal Iowa temporarily stopped shamelessly handing out cash to filmmakers, but the gravy train is up and running again. Iowa lawmakers have not learned the broader lesson: film tax credits should be eliminated permanently because they are terrible tax policy. One of most egregious forms of corporate welfare, film tax credits take money from the taxpayers and funnel it to filmmakers. The claims of economic benefits and job creation are greatly exaggerated (assuming you can even call a job shifted from one state to another a job "created") and ignore the opportunity cost of such tax expenditures (like funding essential government services, or reducing taxes). Film tax credits are yet another example of a politically well-connected special interest group securing subsidies for itself at the cost of the rest of the state's taxpayers and businesses.
For much more on film tax credits, see our Special Report on the topic or visit this section of our site.
New York's cigarette tax of $4.35 (raised this year from the already-high $2.75) is sufficiently high relative to its neighbors to induce schemes to bring in cigarettes from out-of-state. Determined to overcome this resistance, the state is thinking up new efforts to clamp down on smuggling and illegal sales.
One is by going after the Seneca tribe of Native Americans. Cigarettes are sold on tribal lands, and the state tax does not apply as it is sovereign land. New York is unhappy with this arrangement - in 2005, the tribe sold as many cigarettes as the rest of New York altogether - and they claim that New Yorkers are illegally smuggling cigarettes from the reservation to the state. So they passed a law, to go into effect today, requiring the Seneca to collect New York cigarette tax on sales to non-tribal members, if the cigarettes are bought wholesale from outside the reservation.
The Seneca, who rely heavily on the sale revenues themselves, went to court and got a federal judge to suspend implementation of the new tax requirement. The Oneida and Onondaga, two other nearby tribes, will stop buying wholesale and switch to brands produced on the reservation. New York was hoping for $150 million from the scheme, but that probably won't happen.
New York City Mayor Michael Bloomberg tastelessly implied the use of more brutal force against the Seneca for refusing to collect New York taxes on their reservation:
Bloomberg said on a radio show that Paterson needs to grab a "cowboy hat and a shotgun" and demand the money himself.
The Seneca Nation reacted harshly, demanding that the mayor either apologize or resign, calling on Paterson to distance himself from Bloomberg and threatening to pursue a hate crimes case against him.
Bloomberg's office said no apology or resignation would be forthcoming and that the tribes should just "follow the law."
This is a classic case of states reaching across jurisdictional lines to use force to prop up a broken tax system. New York's high cigarette tax is causing these problems, and to ameliorate them, the state should bring it in line with competitors.
More on cigarette taxes here. Previous:
- Seneca Object to New York Cigarette Tax Law, December 18, 2008
Note: Updated to include New York's new cigarette tax rate, effective July 1, 2010.
The Tax Foundation has put up a 10-question quiz for users to test their knowledge of the Bush tax cuts and what President Obama is proposing to do about them.
Here's a sample:
The federal estate tax rate for 2010 is currently zero. If the Bush tax cuts were to expire, what would the rate be in 2011?
A. 35%
B. 39.6%
C. 45%
D. 55%
Take the quiz to find out the answer.
When submitted, an explanation for each answer (with documentation) is provided to the quiz-taker.
In a televised address to the nation tonight, President Obama outlined his plans going foward concering U.S. military presence in Iraq. Obama's plan to formally end combat operations means that those troops who remain in Iraq are now being labeled "non-combat."
But even while they are no longer being called "combat" troops, the troops remaining in Iraq and throughout the Gulf Region will continue to receive combat zone tax treatment. As Stripes Central reported last week, a rumor that was circulating among some in the military that Obama's change would affect the tax treatment of troop pay was just that, a rumor.
Starting Sept. 1, the U.S. mission in Iraq will officially change to mentoring Iraqi troops and police, marking a symbolic end to the U.S. combat mission there. Even though the Defense Department has said the move won’t affect troops’ pay, rumors along those lines have persisted, prompting Stars and Stripes to ask the department about this matter.
“Iraq (land and airspace) is included in the list of designated hostile fire or imminent danger pay areas (effective since Sep 17, 1990),” said Defense Department spokeswoman Eileen Lainez in an e-mail. “These pays are based upon a location's designation as a combat zone or direct support area. Therefore, the pays won't change Sept. 1.”
So there you have it. The current special tax treatment received by those in Iraq has been in place long before President Obama took office or even the previous administration launched Operation Iraqi Freedom in 2003.
For more on combat zone tax exclusions, click here, which includes the following listing of designated combat zones:
Afghanistan: By Executive Order No. 13239, Afghanistan (and airspace above) is designated a combat zone beginning September 19, 2001.
The Kosovo area: By Executive Order No. 13119 and Public Law 106-21, the following locations (including air space) were designated as a combat zone and a qualified hazardous duty area beginning March 24, 1999.
Federal Republic of Yugoslavia (Serbia/Montenegro)
Albania
The Adriatic Sea
The Ionian Sea - north of the 39th parallel (including all of the airspace in connection with the Kosovo operation.)
Persian Gulf area: By Executive Order No. 12744, the following locations (and airspace) were designated as a combat zone beginning January 17, 1991:
The Persian Gulf
The Red Sea
The Gulf of Oman
The part of the Arabian Sea that is north of 10 degrees north latitude and west of 68 degrees east longitude
The Gulf of Aden
The total land areas of Iraq, Kuwait, Saudi Arabia, Oman, Bahrain, Qatar, and the United Arab Emirates
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