Individual income tax payments may soon break a record. The Wall Street Journal reports (paywall) on the surge in individual income tax payments, which the Congressional Budget Office projects will reach $2.6 trillion in the fiscal year ending Sept. 30. Much of the growth comes from taxes on capital gains and pass-through business income. Still, CBO director Phillip Swagel says “There’s a part that is unexplained that we need more time to figure out… It’s a mystery. It’s a maybe happy mystery, to have strong revenues.”
As for corporate tax receipts… It’s the economy, not the TCJA. Booming corporate tax revenues in 2021 led some to claim they are due to big tax cuts in the 2017 Tax Cuts and Jobs Act. But TPC’s Bill Gale and Steve Rosenthal and the Tax Foundation’s Kyle Pomerleau argue that last year’s strong economic growth, high inflation, and pandemic-related relief legislation increased both corporate profits and the taxes business paid.
Slightly better news for the Social Security and Medicare trust funds. The Social Security trustees reported the retirement program will remain solvent until 2034, one year longer than projected last year. Medicare trustees projected the Part A hospital insurance trust fund faces insolvency in 2028, two years later than they estimated last year. The modest improvements are due to higher payroll tax collections from the stronger-than-expected economic recovery.
Three House Democrats continue to push for a banned SALT workaround. Lawmakers from New York and New Jersey asked Treasury Secretary Janet Yellen and IRS Commissioner Charles Rettig to reverse the 2019 rule that blocks one workaround to the federal $10,000 cap on state and local tax deductions. Connecticut, New Jersey, and New York passed laws that allowed local governments to create charitable funds to provide services. Donors in turn could deduct gifts to those charities on their federal income tax returns and avoid the state and local tax deduction cap.
This week on the Hill. The Senate Finance Committee holds a hearing tomorrow on the President’s Fiscal Year 2023 budget. On Thursday, the Senate Budget Committee holds a hearing on improving Social Security solvency by raising taxes on the wealthy.
This Wednesday with TPC: International Spillovers in Tax Policy. Globalization ties national tax issues to international tax policies. Tune in at 10:30 to hear keynote speaker Rosanne Altshuler discuss the roles played by home countries, host countries, and multinational corporations. Expert panels will follow, one examining the effects of the US corporate tax on intellectual property location and a second discussing how a well-designed carbon tax could minimize shifts in production to countries with lower carbon prices. Register and watch here.
On June 16: The 12th Annual IRS/TPC Joint Research Conference on Tax Administration. The virtual conference highlights researchers from the IRS, other government agencies, academia, and private organizations who will present their latest analyses of ways to make tax administration as effective as possible. Learn more and register here.
In case you missed the latest from TPC on TaxVox… Aravind Boddupalli writes that a new Government Accountability Office (GAO) report demonstrates why better data are necessary for a more complete understanding of the tax system’s impacts on racial inequities. Howard Gleckman considers whether Congress should raise taxes to fight inflation. And the Tax Hound argues that absent Roe v. Wade, tax law is the wrong place to decide whether a fetus is a child.
For the latest tax news, subscribe to the Tax Policy Center’s Daily Deduction. Sign up here to have it delivered to your inbox weekdays at 8:00 am (Mondays only when Congress is in recess). We welcome tips on new research or other news. Email Renu Zaretsky at [email protected].
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