The voices of Tax Policy Center's researchers and staff
The IRS is unable to do right by taxpayers, says the National Taxpayer Advocate. In its annual report to Congress, the in-house IRS watchdog finds that the agency’s budget cuts have eroded taxpayer service, especially for low-income taxpayers. At the same time the lack of effective administrative and congressional oversight has eroded taxpayer protections. US tax administration has suffered, to the detriment of compliance and public trust. National Taxpayer Advocate Nina Olson concludes, “This downward slide can be addressed if Congress makes an investment in the IRS and holds it accountable for how it applies that investment.”
Some lawmakers move to repeal the medical device excise tax. Ten Senators, five Democrats and five Republicans, are co-sponsoring a bill to repeal the levy. They argue that the tax hurts the industry’s prospects for growth and kills jobs. The tax is expected to raise $29 billion over 10 years and help pay for the Affordable Care Act. The bill does not offset the costs of repeal, though there are options.
But does the tax really harm the industry? The Congressional Research Service had already concluded that the tax doesn’t hurt profits, and its latest analysis indicates that it has relatively modest effects on employment, estimating that between 47 and 1,200 workers could lose jobs. The industry says as many as 40,000 could hit the streets. Medical devices, whether produced abroad or in the US, are subject to a tax of 2.3 percent of their sale price.
Meanwhile, Bob Goodlatte would base online sales tax on the seller’s location. The House Judiciary Chairman is reportedly circulating a discussion draft of an online sales tax bill that relies on origin sourcing. Only states that join a multi-state clearinghouse could receive revenue on out-of-state purchases. While most analysts and many lawmakers prefer basing tax on the location of the buyer, Goodlatte would let e-tailers collect based on their location. While the measure is very different from one already passed by the Senate, sources call it a “starting point” for discussion.
In New York, Governor Cuomo wants property tax relief. His $1.7 billion plan would provide credits to more than 1 million homeowners and another 1 million renters. Homeowners who make less than $250,000 a year and whose property tax is more than 6 percent of their income would receive a credit for up to half the amount over the 6 percent threshold. The average credit would be $950. Renters with incomes up to $150,000 would qualify for a credit if the share of their rent attributed to property taxes is more than 6 percent of their income. Cuomo estimates that 13.75 percent of annual gross rent goes toward property levies. The credits would be paid for by keeping annual spending growth below 2 percent. Budget projections estimated higher spending increases.
Interested in subscribing to The Daily Deduction, the Urban-Brookings Tax Policy Center summary of the day’s tax news? Sign-up here for free access. If you’d like to tell us about a new research paper or have any comments about our new feature, write us at [email protected].
Posts and comments are solely the opinion of the author and not that of the Tax Policy Center, Urban Institute, or Brookings Institution.