Congress returns this week to try again with the Build Back Better (BBB) Act. Preliminary estimates from the Joint Committee on Taxation indicate the Senate Democrats’ draft $886 billion tax package would generate about $60 billion less in net revenue than the House version. The panel added exemptions for employer pension plans and nonprofits and a new minimum tax for the country’s largest corporations. The package also expands clean energy credits. For now, it excludes changes to the cap on the state and local tax deduction. Will Democrats finally be able to write a version of BBB that satisfies holdouts such as senators Joe Manchin and Kyrsten Sinema?
Georgia lawmakers may expand the state's rural hospital tax credit. The state launched the program in 2016 with a $60 million cap, which it reached in 2018 after giving donors a dollar-for-dollar credit for contributions to rural hospitals. Donations declined in 2019 and 2020 but hit the ceiling again last August. Now, some lawmakers want to raise the cap to $100 million.
Will Arizona lawmakers repeal and replace their $2 billion tax cut? They passed the massive package in their last legislative session, but opponents gathered enough signatures to place a measure on the November ballot to reverse those tax cuts, Now, legislators are eyeing a new version to phase in tax cuts if the state reaches certain revenue targets, starting at $1.3 billion this year. When fully phased in, the proposal would lower tax rates from between 2.59 percent and 4.5 percent to 2.5 percent. State revenue would fall by $1.9 billion. The tax cuts mainly benefit the wealthy.
Arkansas’ top individual tax rate fell from 5.9 percent to 5.5 percent. On New Year’s Day the lower rate went into effect, marking the largest tax cut in state history. Other changes passed in last month’s special legislative session include consolidation of low-income and middle-income tax tables, a new nonrefundable tax credit for low-income households; and a cost-of-living increase in the standard deduction. State officials project the tax changes will reduce general revenues by about $135 million in fiscal 2022, which ends June 30. The revenue loss will gradually increase until it reaches $498 million by fiscal 2026.
Germany may soon roll out $34 billion in tax relief. Germany’s Finance Minister Christian Lindner said plans include full deductibility of contributions to pension insurance. The tax relief will be included in the draft budget for next year.
In case you missed TPCers on TaxVox… John Buhl explains why it appears more likely than ever that most of the TCJA’s tax cuts will stay put, at least until 2025. Aravind Boddupalli and Tracy Gordon review their new report on how city governments are advancing racial equity. Howard Gleckman announces TPC’s 2021 Lump of Coal Award winner… which, given today’s first item, may win in 2022, too.
The Urban Institute’s founding president, William Gorham, died. Distinguished Institute fellow and president emeritus, Gorham served as Urban Institute president from 1968 to 2000. Urban Institute president Sarah Rosen Wartell remarked last week, “Bill was both a giant in the world of public policy research and a kind, funny, warmhearted human who brightened and mentored many lives. His commitment to bringing the power of social science to improve lives and strengthen communities inspired so many over the years.”
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