On the Hill this week. The Senate Finance Committee holds a hearing tomorrow on the impact on small businesses of the Supreme Court ruling in South Dakota v. Wayfair that allowed states to require online retailers to collect sales taxes. The panel will hold a hearing Wednesday on supply chain resiliency. And House Appropriations subcommittees begin marking up spending bills.
More state lawmakers seek gas tax holidays. Idaho Gov. Brad Little is weighing a request by two Democratic lawmakers who asked for a special legislative session to suspend the state’s 32-cent gas tax for six months. A Florida lawmaker wants to accelerate that state’s gas tax holiday, currently scheduled to start in October.
Pay attention to mail from the IRS this month. In February, the agency stopped mailing many letters and other correspondence as it tried to dig out from under its backlog of paper. But this month it resumed sending out CP14 notices that alert taxpayers of underpayments. The agency sends about 9 million of these notices every year.
South Carolina tax rebates will be sent in time for the holidays. Lawmakers reached a budget compromise Friday to provide $1 billion in tax rebates starting in November. The size of the rebates will be based on income tax liability, with a maximum of about $800. The compromise includes a $600 million in relief by lowering the top rate from 7 percent to 6.5 percent and combining lower rates into one 3 percent bracket.
No tax cuts in Michigan, though. Gov. Gretchen Whitmer vetoed a $2.5 billion tax cut passed by the Republican-led legislature. It would have cut income tax rates to 4 percent, increased the Earned Income Tax Credit (EITC), increased standard deductions, and provided a $500 Child Tax Credit. Whitmer prefers an immediate $500 tax rebate, an increased EITC, and repeal of Michigan’s tax on retirement income.
Rhode Island will eliminate its car tax one year early. State lawmakers want to eliminate the 7 percent motor vehicle excise tax this year, one year earlier than scheduled. The state has been phasing out the tax over five years, reimbursing cities and towns for any lost revenue. If the Senate and House approve the speed-up it will lower the state’s budget surplus by $64 million.
Dale Jorgenson dies at 89. The Harvard economist was a leading advocate for reducing taxes on investment and was responsible for improving measurement of productivity. He favored a carbon tax where revenues are used to lower taxes on capital, a design he described in a book titled “The Double Dividend.” In 1971, he received the American Economic Association’s John Bates Clark Medal that honors leading young researchers. Jorgenson’s work provided much of the intellectual underpinning of Republican tax cuts from the 1980s through the 2017 Tax Cuts and Jobs Act.
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