As lawmakers explore options for “Phase 4” coronavirus relief legislation, one idea that has received renewed attention is allowing businesses to cash out business tax credits. This proposal would be strengthened by also permitting acceleration of firms’ accrued net operating loss (NOL) deductions and designing the proposal so that firms can quickly convert these tax assets into cash.
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Rather than find ways to restrict net operating loss (NOL) carrybacks, lawmakers should focus on ways to improve liquidity by cashing out accrued NOLs, which would benefit startups and new small businesses without taxable income to offset in prior years.
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While other states are starting to think about the recovery, California is contemplating tax policies that would stand in the way of economic expansion once the health crisis abates. California’s shortfall is all too real, but tax policies which impede recovery are a hindrance, not a help.
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The HEROES Act, the $3 trillion relief package proposed by House Democrats, is the first bid to provide additional phase 4 aid for businesses and individuals amid the coronavirus pandemic.
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Policymakers will have to consider design options for accelerating NOL deductions to ensure the refunds are simple, provide targeted relief to struggling firms, and are consistent with long-run revenue needs.
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In addition to providing economic relief to individuals and loans to businesses struggling during the coronavirus crisis, the CARES Act changed several tax provisions to increase liquidity to ensure firms survive a large decline in cash flow.
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Norway passed a large coronavirus tax relief package to address layoffs and bankruptcies, which includes a reduced VAT rate, the introduction of a loss carryback provision, and targeted postponements for wealth tax payments, among other provisions.
5 min readTax policy can help by giving businesses current access to future tax “assets”—deductions and credits the businesses will be allowed or owed over time any way under current law—instead of making them wait.
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Instead of simply reaching for fiscal stimulus with the goal of increasing economic activity, tax policy changes can give vulnerable individuals and businesses additional liquidity and space to survive the reduction in economic activity needed in light of the coronavirus outbreak.
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Our new report outlines various policy recommendations for Kansas to consider in order to begin a robust and bipartisan conversation about modernizing the state’s tax code to suit a 21st century economy.
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Why do some companies appear to be profitable but pay little or no federal income taxes? It’s largely due to differences between book and taxable income.
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States incorporate provisions of the federal tax code into their own codes in varying degrees, meaning that federal tax reform has implications for state revenue beyond any broader economic effects of tax reform.
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A recent paper discusses two main trends related to U.S. entrepreneurs: the decrease in the number of entrepreneurs and the increase in their borrowing. Entrepreneurs have increased their debt holdings relative to their assets over the past three decades.
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