- Call for Sunshine Week: "Just Give Us The Earmark Data" (CFA Site »)
- PA-12 Special Election Update: Tim Burns Signs the Taxpayer Protection Pledge
- How Government Accounting Works
- ATRF Analysis: The Importance of International Tax Competition
- How Tax Preparation "Simplification" Will Lead to Tax Hikes
- GAO: Implementation of Coburn-Obama Still Lacking in Some Areas (CFA Site »)
Monday, March 15, 2010
- Latest Developments In The Fight To Stop A Govt Internet Takeover
- State of Illinois Launches Sunshine Portal (CFA Site »)
- China Buys Our Debt, We Give Them Renewable Energy Stimulus Jobs...Seems About Right
- ATR Urges Governor McDonnell to Sign Bill to Abolish State Run Tax Preparation
- Saving the Sea Turtles...But at What Cost? (PRA Site »)
- Craig Miller Signs Taxpayer Protection Pledge in FL-24
- Next Week is Sunshine Week! (CFA Site »)
- The Economics of #StimulusFail
- Missouri Unions and Andy Stern on the Same Page: Raise Taxes (AWF Site »)
- Obamacare, Free Trade, & Our Economic Prosperity
Friday, March 12, 2010
- Rusty Bowers Signs the Taxpayer Protection Pledge for AZ-01 Race
- Ask Your Virginia Legislator to Vote "NO" on Any Budget Containing Higher Taxes
-
ATR Supports H.R. 4781, the
"Keeping American Businesses
Competitive Act of 2010" - Stimulus Dollars Are Taking You for A Ride - On Greyhound Buses (CFA Site »)
- Ronald Reagan Legacy Project Urges Naming of California High School After Reagan
- Democrats Attempt to Subvert Congress in Hopes of Carbon Regulation
- Economic Issues Dominate at the Bloggers Briefing
- Pushback Against EPA’s Attempts to Regulate Carbon Emissions Grows
- Minnesota Gubernatorial Candidate Running on a Platform of Tax Hikes
Thursday, March 11, 2010
- Michigan Jobs Ain't What They Used To Be...Unless You Work For The Government
- ATR and CFA Support Earmark Moratorium
- Voter Fraud in the Name of Tax Hikes
- Ballooning Deficits in Greece Foreshadowing Future for the U.S.? (ASA Site »)
- Green Jobs FAIL
- The Evergreen Tax and Fee Spree
- ATR Staffer Testifies Before U.S. House Energy & Commerce Select Committee
Wednesday, March 10, 2010
- The endemic rot in government run health care
- The Debt Panel's 800-lb. Gorilla: Why Andy Stern Stands Out
- The Left Agree: Obamacare Ushers In Their Radical Ideological Agenda
- We Ought Focus On Cutting Taxes & Spending, Not Deficits
- The Debt Panel's 800-lb. Gorilla (AWF Site »)
-
Does the Obamacare Investment Surtax
Apply to Capital Gains? - ATR Urges Opposition to Sen. Isakson Pension Bailout
- Taxpayers to Legislators: Clean Virginia Budget of Taxes
- ATR Supports the Georgia JOBS Act
Tuesday, March 9, 2010
- ATR Urges Utah Governor Herbert to Veto Tax Increase
- More on the VAT
- Public Sector Jobs
- How 550,000 jobs were destroyed by the minimum wage hike
- How Obamacare Will Hurt Poor Women & Children Most
- Federal Workers Make $11,000 More Than Private Sector Workers, and There’s More of Them (AWF Site »)
Monday, March 8, 2010
- Legislation Introduced to Put Ronald Reagan on the $50 Bill
- Pledge Signer Wins Illinois Republican Gubernatorial Primary
- "Net Neutrality" To Kill Jobs
- NY Supreme Court Votes to Evict Residents and Close Businesses (PRA Site »)
- California US Senate Candidates Square Off in First Debate
Friday, March 5, 2010
- ATR and CFA Support the Spending Limit Amendment
- Utah Representative Breaks Tax Pledge
- AWF Will Rate Vote on House Jobs Bill (AWF Site »)
- Energy Tax Hike Series: Use it or Lose it Tax
Thursday, March 4, 2010
- The reliability of spending "estimates"
- Utah State Senator Tries to Sweeten Tax Hike with Pork
- Obama Administration Makes Attempt to Seize Millions of Acres Across America (PRA Site »)
- More "Stimulus" Boondoggles - Social Engineering and Lobbying for Higher Taxes
- Energy Tax Hike Series: Raises Taxes on Tertiary Injectants
Wednesday, March 3, 2010
- Is This Reality or a Science Fiction Dystopia?
- Andy Stern Update: US Attorney Reviewing Case & Obama Appoints Stern to Debt Panel
- Texans: Do You Know Which Candidates Have Signed the Taxpayer Protection Pledge?
- AWF Asks White House to Take Position on Andy Stern Investigation After Appointment to Debt Panel (AWF Site »)
- AWF Continues Andy Stern Investigation (AWF Site »)
Tuesday, March 2, 2010
- Energy Tax Hike Series: Superfund Tax Reinstated
Monday, March 1, 2010
Energy Tax Hike Series: LIFO Explained
From Brian M Johnson & Ryan Ellis on Thursday, March 19, 2009 4:51 PMBelow is ATR's Energy Tax Hike Series explaining LIFO:
ATR Obama Budget Analysis: Energy Tax Hike Series
LIFO Explained
Current Law
When companies purchase items to sell later, they are accumulating an “inventory.” When a good is sold, the profit is the sales price minus the inventory cost. Since 1938, companies have had a choice when determining which parts of their inventory they report to calculate the profit on a good sold. Under “first-in, first-out” (FIFO), the oldest parts of the inventory are what are used to make this determination. Many companies, however, choose to use the “last-in, first-out” (LIFO) method, whereby the newest inventory purchased is what’s used in the profit calculation.
The LIFO method is most valuable for companies that see the prices of their inventory rise over time. Let’s say I have a $10 item I bought several years ago, and a $12 item I bought this year. I want to sell an item for $15. FIFO inventory gives me a profit of $5 ($15-$10). LIFO inventory gives me a profit of $3 ($15-$12). I would only pay taxes on $3 of profit, not $5.
The difference between the FIFO profit ($5) and the LIFO profit ($3) is $2. This $2 becomes part of a “LIFO reserve.” Companies must keep track of this LIFO reserve, which in recent years has been the target of tax increase proposals by members of both political parties.
Obama Proposal
The FY 2010 Administration Budget calls for requiring companies to pay taxes on this “LIFO reserve.” It’s unclear how this would be accomplished, since the ten-year score for this tax increase is only $61.05 billion. Various estimates have scored full LIFO repeal at several multiples of this score.
ATR Analysis
Companies should not have to pay taxes merely on inflation. Yet that is exactly what forcing companies to use FIFO would do. At the very least, companies using a long-standing and perfectly-reasonable inventory accounting standard should not be punished after the fact by being taxed on phantom “reserves.”
LIFO is used most often by energy companies. Taxing LIFO reserves is a clear attempt to slap an unfair tax on energy manufacturers merely to exact a political price. The economic price will be borne by the American people, who will end up paying this “inventory tax” in the form of higher energy prices. The most likely scenario is that taxing LIFO reserves and requiring FIFO going forward will be imposed strictly on energy manufacturers. It’s the ultimate goal of tax increasers, though, to repeal LIFO altogether.
For more information, contact tax policy director Ryan Ellis at rellis@atr.org or federal energy policy analyst Brian Johnson at bjohnson@atr.org
Click here for the printable PDF document.
Permalink | Email | Print | Tags: TAXES, ENERGY, CONGRESS, OBAMA, BUDGET, Federal
Related Articles
PA-12 Special Election Update: Tim Burns Signs the Taxpayer Protection Pledge - Monday, March 15, 2010 1:21 PM
The Final Battle on Health Care: Everything You Need to Know - Monday, March 15, 2010 11:36 AM
ATRF Analysis: The Importance of International Tax Competition - Monday, March 15, 2010 11:24 AM
How Tax Preparation "Simplification" Will Lead to Tax Hikes - Monday, March 15, 2010 11:04 AM
Latest Developments In The Fight To Stop A Govt Internet Takeover - Friday, March 12, 2010 6:19 PM













Add a Comment