The voices of Tax Policy Center's researchers and staff
Congress is in recess and the Daily Deduction will post Mondays until it reconvenes. We’ll be back to our regular schedule on April 13.
With just over two weeks till Tax Day, Treasury wants to clarify Affordable Care Act tax facts. It released fact sheets on common exemptions from the individual mandate, such as a person’s income level, job status, and Medicaid eligibility. As many as 6 million people could face the ACA tax penalty for not purchasing insurance. Of those who are uninsured, about half don’t know they could face a tax penalty, according to the Urban Institute. Intuit, of TurboTax fame, estimates at least 20 million people could qualify for an ACA mandate exemption.
Is the Lee-Rubio tax reform plan offering a fully refundable personal credit? It could help explain why the Tax Foundation found the plan to be highly progressive. But TPC’s Len Burman says “the staffs of senators Lee and Rubio have not confirmed to us that the plan would make the credit refundable and there is no indication in the official document that this is true… It’s possible that senators Lee and Rubio intended to propose such a radical and expensive new cash transfer program, but it would be a big change to the tax law and it's one that deserves to be fully fleshed out in their written plan.”
Washington State Ds want a capital gains tax to fund schools. House Democrats just released a 2015-2017 budget plan with a capital gains tax that would take effect in 2016. It’s projected to raise $570 million in the budget’s second year. The first $400 million would go to K-12 education and the rest would fund higher education. The state Supreme Court ordered Washington to increase spending on K-12 education and Democrats are attempting to comply. Republicans don’t think raising taxes is the way to do it.
Maybe Washington State Rs haven’t seen the news out of Alabama. The Yellowhammer State isn’t known for its tax-loving population, but voters have said yes to school levies in 20 out of 25 local referendums since 2010. Granted, these weren’t new taxes—on capital gains, no less—but as one school board president noted, “I think when it comes down to the wire... people who are on the fence, or maybe even leaning toward the 'no' side, when they really come down to it, children will come ahead of their wallet.”
Two “wrongs” still don’t make a “right” when it comes to pensions and taxes. Urban Institute’s Gene Steuerle warns that when one group’s claim of a financial right—for example, public pensions—is too big for government to pay, another group ends up short-changed. When courts consider public pensioners’ rights, it’s vital to assess (1) whether a government’s balance sheet will work , and (2) whether balancing the books puts too great a burden on others.
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