Repealing the SALT deduction cap would help the wealthiest the most. TPC’s Howard Gleckman takes a look at TPC’s new analysis of who would benefit if Congress repeals the $10,000 cap on state and local tax (SALT) deductions enacted under the Tax Cuts and Jobs Act. TPC estimates that only about 9 percent of households would benefit from the SALT deduction cap repeal, and more than 96 percent of the tax cut would go to the highest-income 20 percent of households. The top 1 percent (who make $755,000 or more annually) would receive more than 56 percent of the tax cut and pay an average of $31,000 less in after-tax income. Repeal would reduce federal tax revenues by $620 billion between 2018 and 2028.
TIGTA blames Big Blue for Tax Day Bungle. Treasury’s Inspector General for Tax Administration (TIGTA) blames IBM for last Tax Day’s electronic filing crash. IBM developed a firmware fix for another client’s similar hardware in January, but somehow never notified the IRS of the patch. Taxpayers could not file electronically for 11 hours on April 17—last season’s deadline.
More tax cuts please. Politico reports that the National Assn. of Manufacturers has urged Congress to expand Tax Cuts 2.0 which is expected on the House floor later this week. NAM wants Congress to make the 20 percent deduction for pass-through businesses permanent and more generous. The provision is due to expire after 2025, along with most of the rest of the individual tax provisions of the TCJA.
In southern California: So many divorces, so little time. The TCJA eliminates the deduction for alimony starting January 1, 2019. So, 2018 may turn out to be a year of tax-motivated quickie divorces, at least in one region of California. The San Diego Union Tribune reports that local attorneys and judges are working quickly to finalize divorces. High-earning people who split up this year will still be able to deduct any spousal support they pay, which could reduce their tax bills by thousands of dollars.
Will tax cuts in France boost public support for President Emmanuel Macron? Macron’s approval ratings are at historic lows, and he’s trying to improve the economy without sacrificing fiscal discipline. The French government released its 2019 budget yesterday, including €6 billion ($7.052 billion) in housing and payroll tax cuts. France’s deficit may reach 2.8 percent of gross domestic product in 2018. The European Union’s deficit ceiling is 3 percent of GDP.
Call for Papers for the 9th Annual IRS-TPC Joint Research Conference on Tax Administration. The event takes place June 20, 2019 at the Urban Institute, and the co-sponsors invite government and non-government researchers from the US and abroad to submit proposals for papers. General areas of interest include measuring and influencing taxpayer compliance, estimating taxpayer compliance costs (burden), tax complexity, improving tax administration, and understanding the nature and behavior taxpayers. Click here for the formal call for papers. For more information about IRS research conferences, including links to previous conference programs and papers, click here. Proposals are due by close of business on Monday, December 3, 2018.
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