And next week on the Hill. The House Small Business panel’s Subcommittee on Economic Growth, Tax and Capital Access will hold a hearing on Wednesday, June 22, on “Audits and Attitudes,” or how the IRS may be helping or hurting small business. The House Judiciary Committee will hold a hearing on impeaching IRS Commissioner John Koskinen. And keep an eye out for the House Republicans’ tax reform blueprint, which could surface next week.
Next week in North Carolina, a vote on an income tax cap. The state senate plans to vote on a proposed constitutional amendment to cap the state’s income tax rate at 5.5 percent, well below the current constitutional cap of 10 percent. The current rate is due to drop from 5.75 percent to 5.499 percent next year and could not be raised under the amendment. The Senate has scheduled a vote for June 25, and the measure may end up linked to state budget negotiations.
Philadelphia passes a soda tax. Yesterday the City Council approved a 1.5 cent-per-ounce levy on all sugary or artificially sweetened drinks sold by distributors in the city. Revenue will help fund universal pre-kindergarten, and other city programs. Other cities including San Francisco and Oakland in California and Boulder, Colorado, are considering soft drink taxes his year, too. TPC’s Donald Marron offers those cities a reminder: Soda taxes may influence behavior, but they won't end obesity or otherwise result in big health improvements.
IRAs are tax free, really they are. When TPC’s Steve Rosenthal and Lydia Austin published their estimates that about three-quarters of US corporate stock is held in tax-free accounts, they included IRAs in that category. Some commenters argued that while IRAs are tax deferred, they are not tax-free since retirees must pay income tax when they take distributions. Lydia explains why economists say these accounts are in fact tax-free. Really.
Big data snafu for California taxpayers. About 30,000 Californians received erroneous notices last month that they owed state income taxes. The state tax board got so many calls that it could only answer 20 percent of the complaints last week. Those taxpayers will soon receive a “Second Notice of Tax Return Change” — also known as an apology. Any necessary refund checks go out seven to 10 days after that. The tax board blamed late reporting of employee tax withholding.
Speaking of tax administration… The Sixth Annual IRS-TPC Joint Research Conference on Tax Administration takes place on Thursday, June 23. Researchers from the IRS, other government agencies, academia, and private organizations will discuss some of the latest analyses seeking to make tax administration as effective as possible. Space is limited, but the presentations and discussions will be streamed live.
As for the European Union… The Wall Street Journal reports (paywall) that the EU may make a decision in July on its two-year investigation into whether Apple’s tax arrangements with Ireland constitute improper state aid to the firm.
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