The voices of Tax Policy Center's researchers and staff
The CBO, the ACA, and the economy: Precision doesn’t mean accuracy. Last Friday, the Congressional Budget Office projected that repeal of the Affordable Care Act would add $137 billion to the national debt over 10 years but boost the economy. But the estimates came with a big warning: “[R]epealing the ACA could in fact reduce deficits [between 2016 and 2025] or could increase deficits by a substantially larger margin than the agencies have estimated.” In other words, as TPC’s Howard Gleckman translates, CBO “has no idea… [W]hen you hear a lawmaker tout a precise estimate to make a political point, caveat emptor. Especially with a complex law like the ACA.”
They get by with a little help from their… tax planners. Investment manager Renaissance Technologies gets incredible returns and, as TPC’s Steven Rosenthal explains, takes tax planning to a whole new level. Its employees can shelter tens of millions of dollars earned by its flagship Medallion fund in tax-free Roth IRAs. “If the fund averaged ‘only’ a 50% (not [the fund’s average of] 71.8%) annual return, a $350,000 Roth IRA would be worth about $20 million in 10 years, free of taxes and, in 20 years, $1.16 billion.” The Labor Department OK’d the scheme, but Rosenthal wonders why the IRS isn’t reviewing the practice.
Let the sunshine in… Tax Analysts has asked the US District Court for the District of Columbia to compel the IRS to release records of bonus awards paid to high-level executives since 2010. The publication made the request in February under the Freedom of Information Act, but the IRS hasn’t responded. Tax Analysts President and Publisher Christopher Bergin said, “We have no agenda other than transparency… Sunshine is the best disinfectant. If there's something wrong, sunshine will help fix it.”
Things are looking sunny for Ohio golf courses… Other properties, not so much. In the budget just passed by the Ohio Senate, golf courses’ property tax values would be based on the income they generate, rather than on the generally higher value of their land. Said one county auditor, “Undoubtedly, this income approach will likely yield less property taxes collected from golf courses, and commercial and residential properties in the surrounding area will have to pick up that loss. That is a reality.”
In Washington State: Work to avoid a partial shutdown. The legislature’s special budget session wraps up Saturday and the fiscal year ends June 30, but legislators are still struggling to make a deal. The House just dropped its plan to reduce reliance on the sales tax and impose a capital gains tax on investors who receive more than $25,000 a year from investments. Republicans didn’t go for it. Next move: Democrats on the House Appropriations Committee released a budget proposal that won’t raise taxes, though a separate proposal would close some $356 million in tax preferences. Will it get through? The clock ticks on.
On the Hill today: The Senate Finance Committee will mark up several bipartisan healthcare bills. Chairman Orrin Hatch noted that “this markup will give members the opportunity to act on common sense legislation that will improve the healthcare system for patients and taxpayers alike.”
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