December 20, 2006

Gulf States Get New Tax Break

4

That’s the number of states that will begin receiving royalties from oil companies drilling off their coasts under legislation passed by Congress in its closing days. Alabama, Louisiana, Mississippi and Texas stand to gain millions of dollars from the arrangement, which opens up 8 million more acres for new off-shore drilling.

As part of a tax package that Congress approved just before wrapping up on Dec. 9, four states — Alabama, Louisiana, Mississippi and Texas — will begin receiving millions of dollars in royalties from oil companies drilling off their coasts under legislation which also opens up 8 million more acres for new off-shore drilling. The legislation would also allow seven states without income taxes, Florida, Nevada, South Dakota, Tennessee, Texas, Washington and Wyoming to continue to deduct sales taxes from their federal taxable income. The sales-tax deduction is intended to assure equal treatment with citizens in 41 states who can deduct state and local income taxes when they compute their federal tax liability. The tax break for the seven states expired Dec. 31, 2005, but the extension would be retroactive to cover 2006. The provision expires at the end of 2007, but some budget experts speculate that, like other tax cuts, this one would be routinely extended. Nine states impose no income taxes, but Alaska and New Hampshire also have no state sales taxes so are unaffected. Read More