The voices of Tax Policy Center's researchers and staff
The GOP is putting the finishing touches on the first budget resolution in a decade. The Hill reports that an agreement could be voted on by the end of the week. The Associated Press reports that the final resolution will reportedly drop the House provision to move part of Medicare to a premium-support program by 2024.
Treasury Secretary Jack Lew sees a little light at the end of the highway funding tunnel. At a Bloomberg Government Forum, he noted growing Congressional interest in the Obama administration’s plan to pay for a $478 billion infrastructure improvement effort. The White House would impose a one-time 14 percent tax on $2 trillion in overseas earnings held by US companies, and then a 19 percent tax on future foreign profits. The highway funding bill expires on May 31. Caution: The road to a highway funding deal is, as ever, rocky.
How much longer will I be able to swap my Matisse for your Picasso? Section 1031 of the tax code allows an investor to put off paying the 28 percent tax on capital gains on the sale of certain items, including art. A collector/investor just has to do a like-kind exchange and use profits from a sale of one piece of art to buy another. The President’s 2016 budget would eliminate this tax break for art deals and limit its use for other swaps to bring in an estimated $19.5 billion over 10 years. TPC’s Steven Rosenthal said, “In these days of concern over income inequality and trying to spread the [tax] burden progressively, this particular provision—especially applied to art—would provide a big bang for its buck.”
A drive to expand college savings plans moves ahead. The Senate Finance Committee plans to consider a bill tomorrow to expand Sec. 529 accounts. A House version passed easily in February. Under the proposal, students could use 529s to buy computers, and could redeposit refunded tuition into the tax-free accounts . The proposal would also reduce required paperwork.
But what about an effort to help middle-income seniors keep their retirement savings longer? TPC’s Howard Gleckman explains a small but important change in retirement savings rules proposed in the President’s 2016 budget. “The proposal would exempt those who have $100,000 or less in retirement savings from having to take required taxable distributions from 401(k)s, IRAs, and the like starting at age 70 ½…” Middle-income retirees could keep their savings longer, and use it for future medical and long-term care costs. Congress has ignored the proposal so far.
In Louisiana, House lawmakers consider raising revenues to close the state’s $1.6 billion budget deficit. This week they’re voting on measures to raise the cigarette tax, eliminate some business tax deductions, and reduce energy tax breaks. They’ll also consider phasing-out a film tax credit, taxing online purchases, and reinstating a 1 cent sales tax on certain items. They’ll also vote on a bill that would prohibit companies from getting refunds after paying 12 different taxes, refunds described by GOP Governor Bobby Jindal as “corporate welfare.” The state legislature has to pass a budget by June 11, but possible presidential candidate Jindal insists it must not amount to a net increase in taxes.
Today on the Hill: A Democratic plan to repeal the Affordable Care Act “Cadillac tax.” Some House Democrats say the tax on the nation’s most expensive insurance plans is unfair to those living in more costly parts of the country, like the Northeast and West Coast. Today, Representatives Joe Courtney of Connecticut, Donald Norcross of New Jersey, and Dina Titu of Nevada release their bill to eliminate the tax. The Obama administration and other Democrats say the tax on high-cost insurance plans will affect only the wealthiest taxpayers. Also today: The Senate Finance Committee holds a rescheduled hearing on audits and appeals issues in Medicare.
Interested in subscribing to the Daily Deduction, the Urban-Brookings Tax Policy Center summary of the day’s tax news? Sign-up here to get the Daily Deduction delivered to your inbox every morning. If you’d like to tell us about a new research paper or have any comments about our feature, write us at firstname.lastname@example.org.
Posts and Comments are solely the opinion of the author and not that of the Tax Policy Center, Urban Institute, or Brookings Institution.