A flat no on a Fair Tax? Speaker Kevin McCarthy has told reporters he opposes the Fair Tax Act, which would levy a 30 percent national sales tax. McCarthy reportedly promised a House vote on the legislation to secure the Speaker’s gavel. Now it appears the bill first may be referred to the Ways & Means Committee, where it may get no more than a hearing. At least three Republican congressmen have pledged to oppose the bill.
Sen. Manchin wants to keep domestic sourcing rules for EVs. The West Virginia Democrat introduced a bill yesterday to prevent Treasury from permitting tax credits for electric vehicle (EV) purchases without requiring domestic materials and production. Manchin got the sourcing provisions included in last year’s Inflation Reduction Act, but Treasury is allowing the credits without those requirements until it completes guidance, expected ln March.
Meanwhile, have EV automakers discovered a credit loophole? Commercial EV tax credits have far fewer requirements than those for consumer vehicles. But the commercial credit, intended to encourage vehicle fleets to electrify, does not specify whether leased vehicles are commercial. Thus, automakers can claim the credit if they own vehicles they lease, apply the $7,500 credit to the lease price, and lower monthly payments.
FASB wants to know more about corporate tax payments. The Financial Accounting Standards Board wants US multinationals to report to shareholders more information about their worldwide tax liability. The US Chamber of Commerce is against the idea, insisting investors already have that information.
Michigan taxpayers may soon see their tax bills shrink. A 2015 law says Michigan’s 4.25 percent income tax rate must decrease to 4.05 percent if the general fund grows faster than inflation starting this year. Michigan currently has a $9 billion surplus and next week lawmakers will learn whether the fiscal situation triggers the tax rate cut, which could cost $800 million. Democratic Gov. Gretchen Whitmer proposed other tax cuts in her new budget. Combined with the automatic rate cut, Michiganders’ tax bills could fall by as much as $1.6 billion.
And Minnesotans might get tax rebates thanks to a surplus. Democratic Gov. Tim Walz proposed a tax rebate of $1,000 for individuals earning up to $75,000 annually ($2,000 for couples making up to $150,000). Parents could receive an additional $200 per child, with a maximum family benefit of $2,600. The rebate could benefit as many as 2.5 million households.
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