Will GOP anger over Obama’s immigration orders stall EITC expansion? President Obama allowed undocumented immigrants to seek work authorization, get a Social Security number, and claim the Earned Income Tax Credit. The EITC enjoys bipartisan support, but that support fades when it comes to undocumented immigrants. Senate Homeland Security Chair Ron Johnson of Wisconsin wants the Treasury Inspector General for Tax Administration to look at what he and colleague Ben Sasse of Nebraska call “amnesty bonuses.” It is an interesting choice since TIGTA and the IRS have been squabbling over eligibility rules for part of the child care credit.
“No tickets for you.” Or at least, maybe not for TPC’s Tracy Gordon. She’s cheering for the President’s plan to cut federal subsidies for premium seats at college sporting events. “A winning record may boost donations to a particular school, there’s no evidence that successful athletic programs boost overall contributions to higher education.” What happens instead? “The athletically rich schools get richer and the poor get poorer.”
Is Obama’s capital gains plan an opening for business tax reform? Urban Institute’s Gene Steuerle explains an intriguing possibility raised by Obama’s proposals to raise taxes on capital gains, cut tax rates for business, and curb tax avoidance by multinational corporations. Taxing the profits of the largest multinational corporations isn’t getting any easier, so “Why not pay for at least some corporate tax cuts with higher taxes on individuals on their receipts of capital gains or similar returns?…Why not tax shareholders directly?” TPC’s Eric Toder describes one way that could work.
A tax showdown in Montana? Democratic Governor Steve Bullock does not want to go the way of Arizona, New Jersey, Wisconsin, Louisiana, or Kansas. He opposes any “grow the economy by decimating the tax base” plan that’s “upside down.” But Republicans in Montana’s House want to cut income taxes by $120 million over the next two years and the Senate’s GOP wants to reduce them by $80 million. Property taxes are on the chopping block, too. Bullock vetoed spending bills two years ago to protect the state’s $300 million surplus. He still wants to protect that surplus. Stay tuned.
A rolling average is rolling right over some Ohio farmers. Properties have been reappraised in Ohio in the past year, and some farmers’ tax bills have doubled. The state calculates farm value by including crop prices, among other measures of productivity, based on a rolling average to smooth out year-to-year changes. Until recently, the system has kept taxes relatively low. Now that record-setting prices from 2006 and 2012 are reflected in the average, tax bills are rising though current crop prices are falling. Some farmers say they might have to sell out before the rolling average comes back down. The 40-year-old program was designed to protect farmers from rising property values generated by neighboring commercial development.
Intuit’s TurboTax has a had a terrible, horrible, no good, very bad few weeks. Last month, the online tax preparation software giant had to apologize for a software change that required a $30 to $40 upgrade. Late last week, it temporarily had to shut down its state tax filing feature after criminals were caught using stolen personal information to file fake returns and claim state refunds. An internal TurboTax investigation found that its own systems were not breached. If you e-filed a state return, TurboTax says you don’t need to take any action. “Returns will be transmitted again when the problem is resolved.”
On the Hill this week: Tax reform lessons, tax break extensions. The Senate Finance Committee will explore what lessons Congress can learn from the Tax Reform Act of 1986 at a hearing tomorrow with former Finance Committee Chair Bob Packwood and former Democratic senator Bill Bradley. The House Ways and Means Human Resources Subcommittee holds a hearing on how federal policy can address economic challenges facing low-income families on February 11. Also Wednesday, the Ways and Means Oversight Subcommittee will examine the IRS's use of civil asset forfeiture laws. At week’s end the House is expected to vote on permanent extensions of tax breaks for charitable donations of food inventory and an extension and expansion of small business expensing limitations.
Interested in subscribing to The Daily Deduction, the Urban-Brookings Tax Policy Center summary of the day’s tax news? Sign-up here for free access. If you’d like to tell us about a new research paper or have any comments about our new feature, write us at email@example.com.
Posts and comments are solely the opinion of the author and not that of the Tax Policy Center, Urban Institute, or Brookings Institution.
- © Urban Institute, Brookings Institution, and individual authors, 2021.