For now, more divided government. The tax debates will continue. Joe Biden is president-elect. Pending two Georgia run-off elections in January, it appears the Senate will remain in Republican hands. Look for ongoing debates in 2021 over tax breaks for retirement savings, the fate of the Tax Cuts and Jobs Act, IRS funding, and the fate of never-ending tax extenders.
New Senate committee chairs. Assuming Republicans retain control of the Senate, 2021 will see shifts at the top of two key fiscal policy panels. Mike Crapo of Idaho will replace Chuck Grassley as Finance Committee chair and Lindsey Graham of South Carolina is expected to chair the Budget Committee.
The election may be (mostly) over but the coronavirus relief talks continue. Senate Majority Leader Mitch McConnell, citing the latest unemployment rate of 6.9 percent and the strong third quarter economic recovery, still is pushing for a smaller deal of about $500 billion. House Speaker Nancy Pelosi insists Democrats will not entertain a bill smaller than $1.9 trillion. It is unclear what a lame-duck President Trump wants.
Wrapping up a budget bill. Congress returns for a lame-duck session this week with one must-do bill on its agenda: A funding measure to keep the government running past Dec. 11. A Biden victory and the likely continuation of GOP control of the Senate may encourage lawmakers to greenlight a (relatively) quick and non-controversial spending bill through Sept 30 so they can focus their attention on the new president’s fiscal 2022 budget.
TPC reduces its revenue estimate of Biden’s tax plan. TPC has revised its analysis of Biden’s tax plan. TPC now finds it would raise about $2.1 trillion from 2021-2030, about $260 billion less than the roughly $2.4 trillion TPC estimated in October. The change results from TPC’s reduced estimate of the revenue Biden could collect from a new minimum tax on foreign income of US-based multinationals.
California Propositions 15 and 19: Still too close to call. The fate of the two ballot measures remains undecided. Proposition 15 would tax at market value commercial and industrial properties valued at more than $3 million, which would raise property taxes for many owners. Proposition 19 would change the rules for tax assessment transfers.
San Francisco voters approve new taxes on high-paid CEOs and big businesses. Under the approved ballot measures, any company whose CEO earns more than 100 times the salary of their firm’s average worker will pay a 0.1 percent surtax. If the CEO earns 200 times more than the average worker, the surcharge is 0.2 percent, and so on. Voters also raised tax rates for many tech companies and on property sales between $10 million and $25 million.
As for tax measures in other states… Arizona voters approved a 3.5 percent surcharge on income over $250,000 for individuals and $500,000 for married couples, which effectively raises the top state income tax rate from 4.5 percent to 8 percent. Illinois voters rejected a graduated income tax that would have increased taxes on high income households. Colorado voters reduced the state’s flat income tax rate from 4.63 percent to 4.55 percent.
Who gets the tax benefit from checkout charity donations? These small, easy donation opportunities are hugely important to participating non-profits and can help boost the reputations of retailers. And they can make a shopper feel good, too. But like so much else these days, these giving opportunities have become controversial. The Tax Hound explains.
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