Cruz blocks Gold Star family fix. Sen. Ted Cruz blocked an attempt by Congress to pass a measure in time for Memorial Day that would cut taxes for children of military personnel and first responders. The measure, attached to a larger retirement savings package, would repeal a provision of the Tax Cuts and Jobs Act that raised the “kiddie tax.” Cruz objected to a separate House provision that blocked his effort to expand 529 savings accounts for home schooling expenses.
The IRS may soon release a draft of its new Form W-4. CNBC reports that the draft, expected before the end of month, likely will require taxpayers to include more information to determine their correct tax withholding for 2020. Employees may, for example, need to know their prior year deductions, current year’s credits, and any additional sources of income including their spouse’s earnings.
Would new tax incentives boost the private long-term care insurance market? TPC’s Howard Gleckman reports that the Trump Administration is looking at ways to increase sales of the policies. They include an expanded tax deduction, a new Health Savings Account-like benefit, and penalty-free withdrawals from retirement savings to purchase LTC insurance. “They’d mostly benefit high-income taxpayers—those who least need government subsidies—but do little to lower the cost for middle-income households, who are most in need of resources to finance their long-term care.”
Texas makes it tougher for local governments to boost property taxes. The Texas House approved the Property Tax Reform and Transparency Act. Governor Greg Abbot is expected to sign the bill that requires voter approval before local governments can raise property taxes by 3.5 percent or more. The measure also would create an online tool to let property owners see how proposed rate changes would affect their tax bills, comment on tax increases, and get schedules of public hearings on setting local tax rates.
Where does California’s pot tax revenue go? The state is collecting less tax revenue from sales of recreational marijuana than the state projected, with only about one-third of communities permitting the business. Most are using the revenue for their general funds rather than drug abuse prevention, public safety, environmental protection, or economic development—the purposes that were promised in the campaign for legalization. But some local governments are putting the tax revenue to specific use to help populations in need of support, such as low-income mothers and children and those experiencing homelessness, according to a Bay Area News Group Analysis.
This Thursday at TPC… State tax reform and the search for new sources of revenue. TPC’s State and Local Finance Initiative hosts a panel that will explore how states are changing their fiscal policies, how much revenue they can expect from new taxes on sports betting and marijuana, and how they are responding to the Tax Cuts and Jobs Act. The panel includes Joe Bishop-Henchman of the Tax Foundation, John Hicks of the National Association of State Budget Officers, Nick Johnson of the Center on Budget and Policy Priorities, and TPC’s Kim Rueben. TPC’s Howard Gleckman will moderate. Register for the event here.
Congress is not in session this week. The Daily Deduction will return to its regular schedule on Monday, June 3.
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