Tax refunds are coming in more slowly and smaller, so far. The first round of IRS statistics shows refunds are down by nearly one-quarter compared to this time last year, from 6,171,000 to 4,672,000. The dollar amount of refunds has fallen by nearly one-third from $12.56 billion to $8.71 billion. The average refund was also smaller--$1,856 compared to $2,035. It is too soon to know whether the declines are the result of the Tax Cuts and Jobs Act, the 35-day partial federal government shutdown, or both, or whether the trend will continue through filing season.
“Congress should request the President’s tax returns.” TPC’s Steve Rosenthal made that argument before the House Ways & Means Subcommittee on Oversight last week. He said the public would benefit from disclosure by presidents, vice presidents, and candidates for these offices; and disclosure would help Congress fulfill its oversight responsibilities. He added that there are two ways for Congress to obtain tax information—the existing legal framework and new legislation—and both are important.
California lawmakers to offer a state-tax incentive to save for college. A new bill in the state Assembly proposes ScholarShare, a program that would allow Californians to take an above-the-line deduction for contributions to college savings (529) accounts. Single filers could deduct up to $5,000 annually while married filers could deduct up to $10,000, even if they do not itemize. Households earning up to $75,000 also would get a one-time matching grant of up to $200 for new accounts. Those who sign up for automatic contributions would get a $25 bonus. .
New life for the millionaire’s tax ballot measure in Massachusetts. Last year the Massachusetts highest court ruled that a ballot initiative on a 4 percent surtax on individual income in excess of $1 million was unconstitutional. Now, supporters are trying to use a legislative initiative to get the measure before voters. Lawmakers would need to vote in two successive legislatures to put the issue on the ballot so voters could not weigh in before 2022.
Will a tax hitting some ex-smokers drive them back to cigarettes? Massachusetts Governor Charlie Baker has proposed a tax on e-cigarettes. Vaping is one of the most effective methods to quit smoking, though it also is addictive and may increase risks of heart attacks. The governor would include vaping products in the state’s 40 percent excise tax on cigars and smoking tobacco (similar to a proposal in Arizona). The expansion could generate an additional $6 million in annual revenue, but might push ex-smokers back to cigarettes. At the same time, the higher price could curb vaping by teens.
This week on the Hill: The House Ways & Means Select Committee on Revenue Measures holds a hearing Wednesday on “How Middle Class Families are Faring in Today’s Economy.”
As for funding the government: Another impasse, or not? Sen. Richard Shelby, a key player in Hill negotiations over President Trump’s demand for money for a border wall, said yesterday that congressional talks are stalled. Meanwhile White House Chief of Staff Mick Mulvaney said “We’ll take as much money as you can give us and then we’ll go off and find the money someplace else, legally… this is going to get built with or without Congress.” Trump’s campaign stop in El Paso today won’t make the talks any easier. Without a deal, the partial government shutdown will resume on Friday.
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