Dynamic scoring: Be careful what you wish for. At the insistence of congressional Republicans, the Congressional Budget Office included macroeconomic effects when scoring President Obama’s latest budget. The result: Obama’s budget would grow the economy slightly over the next five years and by significantly more in the five years after that. Deficits over the period would be about 1 percent of Gross Domestic lower under Obama’s budget than under current law. Probably not the result GOP budgeteers were hoping for.
In California, a high-stakes IRS case against the country’s largest medical marijuana dispensary. Forbes’ Kelly Phillips Erb dives into the details of the IRS case against Harborside Health Center. The dispensary was in Tax Court yesterday after the IRS sent it a $2.4 million tax bill, declared it a drug trafficking organization, and demanded access to years of financial records. The agency is cracking down on medical marijuana dispensaries around the county. Why? The IRS has rules for all income-generating activity, even those that violate federal law but are state-sanctioned, and it wants to collect.
Louisiana may need to raise its income tax. The state legislature begins a special session today, and needs to find a source of revenue to close its budget gap. House Appropriations Committee Chairman Cameron Henry says the state must choose between permanently raising taxes or cutting the state’s free college tuition program.
But Georgia’s tax revenues are climbing. Revenue collections are up by $1 billion in the year ending May 31. Income tax revenue grew by 4.8 percent, while the net sales tax collections grew 4.5 percent. New gas and hotel taxes could raise an additional $900 million for road and bridge projects. Republican Governor Nathan Deal wants to leave office in 2019 with $2 billion in the state’s “rainy day” fund.
Another presidential primary day, another reminder about candidates’ tax plans. Reuters demonstrates how Donald Trump, Hillary Clinton, and Bernie Sanders couldn’t differ more on how to expand the corporate tax base. TPC’s Steve Rosenthal notes that Trump offers a standard business-focused plan, but "the drafting is incomplete, so we can't tell exactly what he's thinking.” Clinton would raise many business taxes and cut a few, while Sanders wants to raise taxes by a lot on overseas profits of US-based multinationals. Congress is in no hurry to enact corporate tax reform, candidate plans notwithstanding.
The IRS released its list of tax-exempt groups under increased scrutiny. The groups were flagged by the IRS as potentially engaging in political activities, which are limited by IRS rules. The IRS released the list of 426 nonprofit organizations after NorCal Tea Party Patriots filed a class action lawsuit against the agency, claiming IRS scrutiny violated First and Fifth Amendments of the US Constitution and the Privacy Act. The list provides NorCal with names of groups who might join the lawsuit. The Hill reports that 60 groups have the word "tea" in their name, 33 have "patriot" and 26 refer to “liberty.” Three had "occupy" in their name, according to the report.
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