Executive action to reduce capital gains taxes? In the latest version of the rumor that will not die, several news outlets reported that President Trump and top aides met yesterday to discuss tax cutting alternatives, including administrative changes in capital gains taxation—such as indexing of gains, the subject of on-again-off-again speculation for months. After the meeting, The Wall Street Journal reports (paywall), President Trump said he will not pursue indexing at this time.
Roll back the SALT cap? House Ways & Means Democrats plan to discuss concerns with the federal $10,000 cap on state and local tax deductions. Will talks lead to legislation? Chairman Richard Neal says the Select Revenue Measures Subcommittee will soon take up the issue.
How should we tax the rich? TPC’s Howard Gleckman describes the many ideas proposed by Democratic politicians. They include raising tax rates on ordinary income for the highest-income taxpayers, or raising rates on capital gains, changing how the US taxes bequests, taxing wealth—or a combination of any of these. The Tax Policy Center will hold a taxing wealth program on September 24—register here.
A nearly quarter-billion dollar “oops” in Colorado. A woman who earns less than $3,000 a year working part time at a thrift shop got a shocking tax bill from the Colorado Department of Revenue. The department told Donna Smith, a 55-year-old woman with a disability, that she owed $216,399,508 in back taxes. The department determined that commercial tax software incorrectly recorded her federal taxable income. Her mother will amend the tax return. The state, which say it found 44 other returns with a similar problem, promises to correct the error..
Davis, California, declares a fiscal emergency while waiting for a sales tax renewal vote. The city can now hold a special election in March 2020 on a ballot initiative to renew a 1 percent sales tax that expires in December 2020. Absent the emergency declaration, the city would have had to hold the election in November—and miss out on $2.2 million in tax revenue, since the city would have to wait until April 2021 to collect the renewed tax.
New OECD report helps explain what drives tax morale. The report builds on previous research by the Organization for Economic and Cooperative Development by identifying the factors that make people willing to pay taxes in developing countries, including the effect of public services. It uses new data on tax certainty to explore the willingness of businesses to pay taxes and concludes with a discussion of how tax morale considerations can improve compliance.
Check out the TPC State and Local Finance Initiative’s data query system. This system allows flexible presentation of data from the Census of Government’s State and Local Finance series. This tool includes data for 1977-2016 on revenues, spending, and debt and can be used for comparative, single state, or time series analysis. Data are available in dollars, per capita fraction of personal income, general revenues, or total expenditures. They represent state aggregates for a selected level of government.
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