How much would Sen. Kamala Harris’ LIFT Act help, and cost? TPC’s Howard Gleckman reports on new TPC estimates of Harris’ Livable Incomes for Families Today (LIFT) Act. Her plan would create a new refundable tax credit for low- and middle-income households, cutting taxes in 2019 by an average of about $3,200, or 1.8 percent of after-tax income. But it also would be extremely costly, reducing federal revenue by nearly $3 trillion over the next decade and by $3.4 trillion over the following ten years—unless Congress agrees to offset the expense with tax increases.
News on the Hill. Rep. Kevin McCarthy (R-CA) has been elected to lead the House Republican Minority in the 116th Congress. As for the remaining tax agenda for the 115th session, outgoing House Ways & Means Chair Kevin Brady listed improvements to the IRS, action on expired tax breaks (aka tax extenders), and corrections to the technical glitches in the Tax Cuts and Jobs Act. Even Brady wasn’t sure whether Congress would have much interest in tax bills during a lame duck session.
Double dipping tax breaks. Amazon chose Long Island City, New York as one of its new headquarters locations. But the community lies within a newly-designated Opportunity Zone—where developers are eligible for additional tax breaks. If they follow Amazon to the area, their investors may avoid taxes on new and prior investment gains. Does the quickly gentrifying area really need to offer such tax breaks? Good question.
Speaking of Amazon. A new TPC report finds that most job creation (or loss) in a locality results from the success or failure of existing firms, not relocation of outside businesses. The findings suggest that spending public resources to entice new businesses may not be a cost-effective strategy.
IRS Commissioner says updating technology is a priority.Like so many of his predecessors, newly-installed Commissioner Charles Rettig wants to modernize the IRS. He told the American Institute of CPAs that the agency’s computer system “has been patched year after year after year,” like a car with so many replaced parts it should just be replaced entirely. He added that taxpayers deserve the kind of service at the IRS that they get at private companies. At the same meeting, National Taxpayer Advocate Nina Olson said she’ll ask Congress to give the IRS a stand-alone five-year funding pool for research and development.
IRS releases its Criminal Investigation Annual Report. A major focus of CI in fiscal 2018 was traditional tax cases, including international enforcement, employment tax, refund fraud, and tax-related identity theft. Other areas of emphasis included public corruption, cybercrime, terrorist financing, and money laundering. Traditional tax cases accounted for 73 percent of the 2,886 cases CI initiated in fiscal 2018. The number of special agents dipped below 2,100, the lowest level since the early 1970’s. Consequently, CI turned to data analytics to help identify the most-impactful cases to target.
What do women want? Last week, Nevada voters backed an initiative to exempt feminine hygiene products from the state’s sales tax. Find out why the Tax Hound thinks they made the wrong call.
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