About the Fair Tax Act… In a speech tomorrow in Virginia, expect President Biden to slam the House Republicans’ plan to abolish the IRS, as well as all federal taxes, with a national sales tax. While the proposal would end the IRS, it would offload collections, administration, and enforcement to state tax authorities in return for a fee. If the tax generates the same amount of revenue as the current tax code, “annual collection fees..for states would approach $10 billion. By comparison, the IRS spent about $13 billion per year over the last decade,” wrote TPC’s John Buhl.
Understanding the federal debt limit. Progress in a deeply divided Congress on raising the debt ceiling remains elusive, putting the US at risk of a financial crisis or even default. TPC researchers have written extensively on the importance of raising the debt ceiling in a timely manner. Check out our collection of work here.
IRS regulatory authority may face more challenges. TaxNotes reports (paywall) on the judiciary’s growing suspicion of the exercise of administrative power by the executive branch. Should Congress be writing tax rules instead of the IRS? Currently, the Chevron doctrine allows the IRS to interpret a statute that is unclear, but US Supreme Court Justice Neil Gorsuch wants to revisit that doctrine. And taxpayers have won several recent cases attacking IRS regulations that did not satisfy the Administrative Procedure Act, which specifies how federal rules are written.
IRS: Free File is now open, and/or be sure to hire a reputable tax preparer. The agency reminds taxpayers that the free-file platform is now available on the IRS website here. Should taxpayers choose to hire a paid preparer, the IRS reminds them to insist their preparer has a valid tax identification number and signs the tax return. The IRS provides tips for choosing a reputable preparer here.
California state lawmakers still want a wealth tax. A coalition of Democratic legislators reintroduced a bill to tax California’s billionaires at a rate of 1.5 percent starting in 2024. Starting in 2026, those worth over $50 million would face a 1 percent tax. The levy would target “worldwide net worth,” including “realized and “unrealized” assets like stocks, real estate, art and collectibles, farmland, and offshore accounts. The tax could raise about $21.6 billion from the top 0.1 percent of California households.
Nevada Gov. Lombardo wants to suspend the gas tax. In his State of the State address, the newly-elected Republican governor proposed a budget that suspends the 23-cent-per-gallon tax for one year. He says the holiday would save a family of four “hundreds” of dollars per year.
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