For a debt limit deal, what might the House GOP in exchange? The Washington Post outlines several ideas currently in the mix among House Republicans: cutting spending, reforming Social Security and Medicare, repealing the $80 billion funding boost for the IRS, clawing back aid for Covid-19 relief programs, and adding new work requirements for federal aid programs. And at least one House Republican thinks the debt limit should never increase. Speaker McCarthy has his work cut out for him.
State governments’ record-high reserves could cushion the effect of a possible recession. The Wall Street Journal reports (paywall) on the estimated $138.6 billion in rainy-day funds held by states this fiscal year. That’s up from $134.5 billion a year ago, according to the National Association of State Budget Officers. Since states essentially have to balance their budgets, healthy reserves like this could prevent spending cuts if tax collections underperform.
States that cut taxes in 2022 offer lessons for those considering more in 2023. TPC’s Richard Auxier shares some key lessons with states considering another round of tax cuts this year. States that implemented permanent cuts, as opposed to one-time rebates, may face tougher fiscal choices
Family structures and income changes make tax credit administration more challenging. TPC’s Elaine Maag, Nikhita Airi, and Lillian Hunter reviewed Census interview data on low-income households from the last two consecutive years. Thirty-nine percent saw the size of their earned income tax credit (EITC) decrease by at least $500, while 20 percent saw their Child Tax Credit (CTC) drop by a similar amount. Lower-income Hispanic families were more likely to see a smaller EITC and CTC from one year to the next.
California waits to hear from the IRS on the taxability of its Middle-Class Tax Refund. As of last month, California’s Franchise Tax Board had issued over $9 billion in payments to more than 31 million California taxpayers and their dependents. But do these payments count as taxable income? The IRS says it will offer guidance as soon as this week.
Colorado taxpayers need to wait to file their taxes online. The state’s free filing portal, Revenue Online, is not yet ready as planned, the Colorado Department of Revenue announced. “It’s a few weeks delayed, and we know that is an inconvenience for people, and we understand that. But we also want to make sure that the system is as accurate and correct as possible,” said department spokesman Mark Ferrandino.
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