Business Matters

Business Matters

Death and Maybe Taxes

Death may be one of those unavoidable things. But taxes? That’s another story.

According to a recent report from the Washington-based Tax Foundation, the percentage of tax filers who pay no income taxes because of credits and deductions in the tax code has reached levels not seen since the 1940s. In 2010, for example, more than 58 million federal income tax filers had no income tax liability after taking deductions and credits. That amounts to about 41 percent of the roughly 143 million tax returns field that year.

“These credits not only have a major budgetary cost both in terms of the lost revenue and the outlay cost for the refundable portion,” said Tax Foundation president Scott Hodge. “They undermine the financial stability of the government by narrowing the tax base and disconnect people from the basic cost of government.”

A recent report from the Virginia Joint Legislative Audit and Review Commission shows that many tax incentives don’t achieve the goal they were created to accomplish. Two recent tax income credits have been created to slow the decline of Virginia’s coal employment and production, for example, although the report suggested the credits have only served to reduce the tax bills of unnamed corporations. Del. Scott Surovell (D-44) introduced legislation to make all recipients of tax credits worth more than $1,000 a matter of public record this year, but the effort was defeated.

“These tax credits are out of control, and it’s a hidden form of government spending,” said Surovell. “It was interesting because the Tea Party came out in favor of it, but a majority of the members on the committee that considered it were concerned about discouraging people from taking tax credits.”

Holiday from Taxes

It’s almost back-to-school time again. That means back-to-school tax breaks.

The first weekend of August will be Virginia’s seventh annual back-to-school sales tax holiday, which begins Friday Aug. 3 and ends Sunday Aug. 5. Most school supplies $20 or less and clothing items $100 or less will be exempt from Virginia’s 5 percent state and local sales taxes. The list of tax-exempt items includes pens, pencils, loose-leaf notebook paper, scissors, binders, backpacks, construction paper, sneakers, dresses, jeans and T-shirts.

“Of all the commonwealth’s three sales tax holidays, this is the most important because it helps parents around the state save money while purchasing essential school supplies, clothing, shoes to help their children have a successful year at school,” said Gov. Bob McDonnell in a written statement. “But it’s also important to remember that you don’t have to be going back to school to take advantage of these savings.”

New Space Coast

For many years, Texas and Florida dominated the space industry. But now that the shuttle program has ended, Virginia may stand to gain.

NASA’s Wallops Island facility has already seen a spike in activity, including a launch this week of a rocket carrying an inflatable heat shield — technology that will be used next month when NASA lands a science laboratory on the surface of Mars.

“If you can pack an inflatable inside a rocket, send it up into space and then inflate it while you are in space, that means you might be able to take even more instruments and more gear,” said Kathy Barnstorff, spokeswoman for the NASA Langley Research Center.

The end of the shuttle program is likely to result in a boom of private investment. Dulles-based Orbital Sciences is one of the many companies that is planning to lead the private industry into space. Later this year, the company plans to use the Wallops Island facility to launch its Antares vehicle. That launch will be followed by eight more missions in the near future. NASA officials say that means money and jobs for Virginia.

“There’s clearly been a lot of folks who have been working on the launch pad,” said Bill Wrobel, director of the Wallops Island facility. “And that has certainly brought in some jobs.”