How many households will pay no federal income tax in 2015? TPC finds it’s now 45.3 percent, nearly 5 percentage points higher than TPC estimated in 2013. But, as Bob Williams explains, “that doesn’t mean more Americans have moved off the tax rolls… the higher estimate reflects new and better estimates of the number of Americans who don’t file tax returns.” About those who don’t file: TPC counts them all as paying no federal income tax, even though some non-filers have had taxes withheld and some owe tax. Nobody knows for sure. TPC projects that the share of non-payers will fall over time, though more slowly than TPC anticipated two years ago. Here’s why.
Two tax-related plans for paid family leave. The District of Columbia Council proposes the most generous in the nation, offering 16 weeks of paid time off: Those earning up to $52,000 a year would get 100 percent of pay, and those earning more would get $1,000 a week plus 50 percent of their income in excess of $52,000. DC employers would pay a new tax to fund the leave, akin to a state unemployment insurance pool. The DC Chamber of Commerce considers the plan a threat to competitiveness. In contrast to DC’s mandate and new tax, GOP candidate Marco Rubio proposes an employer tax credit for voluntary paid family leave. The TaxVox Tax Hound digs into Rubio’s incentive here.
Bobby Jindal joins the GOP’s tax reform bandwagon. Jindal’s plan, released this morning: three individual rates of 2, 10, and 25 percent, no more personal exemption or standard deduction, and he’d eliminate all itemized deductions except for charitable gifts and mortgage interest. He’d also keep the exclusion for employer-sponsored insurance and the Earned Income Tax Credit. He’d repeal the income tax for corporations and pass-through business such as partnerships, but would tax investment income at ordinary rates.
In Iowa, lawmakers weigh a plan to reduce manufacturers’ tax burden. Next week, state legislators will consider a proposal to expand the number of tax-exempt items used during a manufacturing process. The exemption prevents those items from being taxed both during manufacturing and at the point of sale. The Iowa Department of Revenue says the plan could reduce the sales and use tax for manufacturers by $40 million- a-year, and their local option sales tax by $6 million. GOP Governor Branstad just vetoed $55.6 million in one-time funding for K-12 education, saying Iowa could not afford it.
A Spanish Volkswagen supplier wants an extended tax break in Tennessee. The company, Gestamp, plans a $180 million expansion of its Chattanooga operations and would like an extension of its 10-year payment-in-lieu-of taxes agreement on 29 acres of land. A local organization, Accountability for Taxpayer Money, argues that the city and county can’t afford to take more property of the tax rolls. In fact, they say a six-month moratorium on tax breaks for VW-related endeavors might be in order to give VW time to address its emission scandal. The troubled automaker may not be doing much expanding of its own any time soon.
Politics, and road funding, remain local. Voters in Portland, Oregon, could have a chance to vote on a four-year, 10-cent-per-gallon gas tax increase to pay for street repairs and safety projects. It could raise $58 million over that time period, but excludes diesel vehicles. Proponents want the proposal on the May 2016 ballot.
Today on the Hill. The House Ways & Means Oversight Subcommittee holds a hearing on the rising cost of higher education and tax policy.
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