Tax refunds will go out as early as next week. The IRS announced yesterday that it should be able to send out the first round of tax refunds on time, starting the first week of February. The IRS says 90 percent of taxpayers requesting refunds should get their money within three weeks of filing. Separately, the IRS says it expects that about 2.5 million fewer taxpayers will get refunds this year than last. Some independent analysts predict there will be more refunds. We’ll find out in four months who is right.
TCJA technical corrections may take more time. At a TPC forum yesterday, a top Senate Finance Committee Democratic staffer said it will take a “lot of negotiation” before Congress can agree on technical fixes to the 2017 Tax Cuts and Jobs Act. It has been more than a year since Congress passed the law, but tax counsel Tiffany Smith warned that since Democrats were not involved in writing the TCJA, they are not so enthusiastic about fixing it.
The federal deficit nears $1 trillion, with a capital T. Should we care? TPC’s Howard Gleckman outlines the thinking of Democratic economists Lawrence Summers and Jason Furman, who say we shouldn’t worry too much. Rather Congress should focus on higher priorities such as health care and income inequality. Gleckman notes that Summers and Furman, like many policy advocates in both political parties, prefer funding their own priorities to fiscal prudence. Concludes Gleckman, we “can only hope they’re right.”
And…the 2020 budget will be late. The Trump Administration acknowledged what budget geeks have known for weeks—it will miss next week’s deadline to submit a fiscal plan to Congress. Acting White House chief of staff Mick Mulvaney did not say when the Administration would make its budget public but acknowledged that it has been somewhat distracted by the partial government shutdown.
Ditch the estate tax, say Senate Republicans… again. Sen. John Thune and about two dozen of his GOP colleagues have reintroduced a bill to repeal the estate tax. It’s purely symbolic, since the measure can’t get 60 votes to pass the Senate or win a majority in the Democratic-controlled House. TPC estimates that only about 1700 very large estates are subject to the estate tax since passage of the Tax Cuts and Jobs Act.
West Virginia lawmakers advance a bill to nix taxes on Social Security income. The state’s House of Delegates Finance Committee approved a bill to eliminate taxes on Social Security income, at a cost of about $50 million a year. Lower-income West Virginians already are exempt from tax. The bill is likely to see bipartisan support in the legislature. .
Should Congress use the income tax to discourage consumer advertising for prescription drugs? TPC’s Donald Marron considers an effort led by Democratic Sen. Jeanne Shaheen. Her bill would prohibit firms from deducting the costs of any consumer advertising. But Marron explains why limiting tax deductions is a blunt and arbitrary way of addressing a legitimate concern. Instead, he concludes, regulation should be the first line of attack.
Who’s got the more progressive tax policy, Warren or Harris? TPC’s Howard Gleckman considers the contrasting tax plans of Democratic presidential hopefuls Elizabeth Warren and Kamala Harris. Both senators want to reduce inequality but Harris would do so by cutting taxes for low- and moderate-income households while Warren would do so by raising taxes on the very wealthy. Writes Gleckman: “Both want to sail the great middle class ship to the promised land of economic well-being. Both see the vessel crashing into a bridge of inequality. The question is: Do you lower the river or raise the bridge?
What does Howard Schultz think about Warren’s wealth tax? Not much. The former Starbucks CEO (and billionaire) who is considering a third-party run for the White House says a surtax on wealth in excess above $50 million is “ridiculous.” Schultz told NPR that the nation has a “dire need” for tax reform but did not say what his plan would look like.
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