The FairTax would add trillions of dollars to the deficit over ten years. TPC’s Bill Gale and the Tax Foundation’s Kyle Pomerleau analyzed the FairTax. They find the proposed tax rate is far too low to achieve deficit neutrality. Rather, its cited 23 percent “tax-inclusive” rate would add $10 trillion to the federal deficits over the next decade. Their full study will be published in a forthcoming edition of Tax Notes Federal.
Will President Biden use NIIT revenue to keep a Medicare trust fund solvent? TPC’s Howard Gleckman reports that two highly-placed sources say that President Biden’s budget proposal may allocate revenue from the 2010 Affordable Care Act’s Net Investment Income Tax (NIIT) to maintain solvency of Medicare’s Part A Hospital Insurance Trust Fund. The CBO estimates that shifting those funds from general revenues would generate $500 billion for Medicare over the next decade. Absent changes, the trust fund could become insolvent in five years.
Senate Finance Committee approves Werfel as IRS Commissioner. In a bipartisan 17-9 vote, the panel approved the nomination of Daniel Werfel as the next IRS Commissioner. Said Chairman Ron Wyden: “The fact that Mr. Werfel’s nomination passed through committee with bipartisan support is a testament to his record as a fair-minded public servant who’s able to work with both sides in Congress.”
Next week on the Hill and elsewhere. The Senate Finance Committee will hold a hearing on March 7 about tax policy’s role in increasing the supply of affordable housing for working families. The same day, the House Ways & Means Committee will hold a field hearing on the state of the economy for American workers, farmers, and families. The hearing will be webcast live at 8:00 am CST.
Alabama lawmakers propose reducing taxes on groceries. A state House Democrat introduced a bill that would give counties and municipalities the authority to exempt food from Alabama’s state and local sales taxes, which can reach as high as 11 percent in total. The state portion of the sales tax rate is 4 percent. The tax on groceries currently generates $500 million a year. Efforts to reduce or eliminate the tax on groceries have failed in the past, and this measure already faces an uphill battle, reports the Alabama Daily News.
Texas bill would give a property tax break to some families over others. A Texas House bill introduced by a Republican lawmaker would give qualifying couples a 40 percent property tax reduction if they have four children. The tax break would grow with each additional child. Couples with ten or more children would pay zero property tax. For a couple to qualify, they would have to be heterosexual, never divorced, and their children must have been born or adopted after the couple’s marriage date. The proposal excludes LGBTQ couples, single parents, divorced parents, and blended families.
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