Taxes down, refunds up. That is the experience of H&R Block clients, at least. The firm reports that as of March 31, its clients’ tax refunds were up by 1.4 percent while their overall 2018 tax liability fell by 24.9 percent on average.
Just in time for April 15: TPC’s tax calculator. TPC’s updated online tax calculator shows how the Tax Cuts and Jobs Act affected individual income taxpayers in 2018. Users can look at sample taxpayers or build their own examples and compare how the old law and TCJA potentially affect the amount of taxes owed. Remember, it’s all about total tax liability, not tax refunds.
Trump tax return fallout. Yesterday, the Treasury missed a deadline for providing Donald Trump’s tax returns to House Ways & Means Committee Chair Richard Neal. The chairman has been quiet but other Democrats have not. Rep. Bill Pascrell, who has been outspoken in his demands for Trump’s returns, suggests Congress could hold Treasury Secretary Steven Mnuchin in contempt for refusing to hand over the paperwork. Mnuchin says he will consult with the Justice Department but has given no indication when those discussions will conclude.
Elizabeth Warren proposes a tax on corporate “book” profits. The senator and presidential hopeful has proposed a surcharge of 7 percent on worldwide corporate earnings exceeding $100 million. The tax on book earnings is aimed at an estimated 1,200 companies that report large profits on financial statements but much lower taxable income. Warren’s campaign estimates the tax could generate $1 trillion in revenue over ten years. NYU law professor Dan Shaviro’s take on the tax is here.
Repealing tax increases, expanding tax cuts. A bipartisan group of House members is trying again to repeal the medical device tax, while another group wants to expand electric vehicle and hydrogen fuel cell tax credits.
How do you know if a tax proposal is serious? TPC’s Howard Gleckman offers a guide to considering policy ideas. In a nutshell: Is it specific? If it is a tax cut, how is it paid for? If it is a tax increase, will it really raise the revenue it promises? Who is proposing it, and why?
A graduated income tax advances in Illinois. The state’s Senate Executive Committee approved on a party-line vote a constitutional amendment to allow a graduated-rate income tax. Governor JB Pritzker proposed replacing the constitutionally mandated flat-rate income tax with graduated rates. If the legislature agrees, the measure could be put on the 2020 ballot.
In Texas, three political leaders back a sales tax increase, with a caveat. Gov. Greg Abbot, Lt. Gov. Dan Patrick, and state House Speaker Dennis Bonnen support a plan to raise the sales tax rate from 6.25 percent to 7.25 percent. In exchange, they want to lower property taxes across the state and get lawmakers to agree to limit future local property tax increases. The trade-off could generate billions in new revenue, but Democrats are skeptical.
Congress is not in session from April 15 through April 26. The Daily Deduction will post April 15 and April 22 and return to its regular schedule on April 29.
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