Wall Street isn’t worrying yet. After Speaker Kevin McCarthy spoke from the New York Stock Exchange with scaled-down demands from Republicans in exchange for raising the debt limit, the market didn’t react. But if the GOP caucus does not maintain a united front, that could change. There may be less time than initially thought before Treasury exhausts its available “extraordinary measures.” It will depend on whether tax receipts for the 2022 tax year meet or fall short of expectations. The Bipartisan Policy Center’s Shai Abbas told CNN, “If cash flows are dramatically short… things will start moving very quickly once we get into May.”
Today on Capitol Hill. The Senate Finance Committee will hold a hearing with IRS Commissioner David Werfel to review President Biden’s fiscal year 2024 IRS budget and the IRS’s 2023 filing season. The House Ways & Means Committee will hold a hearing on the US tax code, corporate tax subsidies, and the Chinese Communist Party.
Sen. Bernie Sanders and colleagues introduce a bill to establish a progressive estate tax. The For the 99.5 Percent Act would create a new estate tax rate structure for the top 0.5 percent of Americans, who inherit over $3.5 million in wealth on average. It would impose a 45 percent tax rate on estates worth at least $3.5 million and a 65 percent tax rate on the value of estates worth over $1 billion. It would also end tax breaks for dynasty trusts, close loopholes in the estate and gift tax, and allow family farmers to lower the value of their farmland by up to $3 million for estate tax purposes.
Tune in tomorrow for TPC’s Prescription on legalized marijuana and its taxation in states. TPC’s Richard Auxier will talk with Howard Gleckman about the flurry of activity at the state level on marijuana decriminalization and legalization. He’ll share lessons learned so far on how to tax this economic activity. Register and tune in here for the noontime event.
The IRS has cleared its backlog of paper tax returns. The agency declared yesterday that it is completing its first “normal” tax filing season since the COVID-19 pandemic struck in 2020. The IRS says it cleared its backlog of millions of unprocessed returns from previous years. The agency used some of its new $80 billion in funding to purchase new scanning technology, allowing for the digitization of paper returns and ensuring their quick processing.
Tax refunds are smaller this year. IRS statistics show that 69 percent of processed returns have resulted in refunds as of April 7. Politico reports this is the first time that rate has dropped below 70 percent in at least ten years. The total amount of refunds paid has fallen 10.6 percent to $199 billion.
As for next year: IRS encourages filers to withhold the right amount in 2023. The IRS encourages taxpayers to use the IRS Tax Withholding Estimator to update the amount of tax taken out of their 2023 pay. This could give taxpayers more cash in their pocket throughout the year or help them avoid a tax bill when they file next spring.
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