TPC corrects its analysis of lame duck tax proposals. TPC revised its recent analysis of proposals to reduce business taxes that are under discussion in Congress. TPC’s initially over-estimated the revenue loss of these provisions and their benefits to households. The revised analysis looks at extending several business provisions as well as restoring an expanded Child Tax Credit and earned income tax credit. Extending them all would reduce federal revenues by about $700 billion from 2023 to 2032. The distribution of benefits would vary widely, depending on which proposals are enacted. TPC’s Howard Gleckman describes the updated analysis here. Details on the errors are here.
Spending still stuck. Time passes and still no congressional spending agreement. Senate Democrats say they’ll vote next week on a plan they’ll unveil on Monday. But it will need 60 votes and thus is doomed without GOP support. The latest sticking point: about $26 billion in domestic spending for agencies including the IRS. That’s a pittance compared to an overall spending bill that could hit $1.7 trillion. But it is that time of year.
Possible CTC help from a GOP candidate for Ways & Means chair. Rep Jason Smith (R-NE), one of three candidates for the post, says he could work with Democrats to enhance the Child Tax Credit. On the other hand, Smith says he is no hurry to address the corporate minimum tax that was included in the Inflation Reduction Act. Repealing it, as some businesses want, will be “at the back of the line,” he says. Smith is running as a conservative populist.
Minnesota enjoys a budget surplus, for now. State finance officials project a $17.6 billion surplus, and Gov. Tim Walz has plans for the money. They include tax cuts such as rebates of up to $2,000 per family, child care credits, tax exemptions for Social Security benefits, and property tax cuts. One state economist still urged caution, since not all the money is in the permanent revenue stream. Plus, the estimate covers 31 months, which is a long time in an uncertain economy.
Wisconsin will tax student debt relief absent change to state law. Republic lawmakers want to apply some of Wisconsin’s $6.6 billion budget surplus toward tax cuts. Would that include an exemption for the student loan forgiveness provided through the American Rescue Plan Act? Under Wisconsin law, borrowers may owe state tax on that debt relief. Complicating matters: The IRS told loan servicers that they are not required to send debt cancellation forms to borrowers or state tax departments. Without them, the Department of Revenue has no way of knowing whose debt has been forgiven and may owe income tax.
When is a checkout donation not a donation? A class action lawsuit has been filed against CVS Health Corporation that accuses the drug chain of deceptive fundraising. The plaintiffs claim CVS used customer donations collected at points of sale to fulfill its promise to contribute $10 million in corporate funds to the American Diabetes Association. CVS also promised to host an in-store fundraising campaign. CVS filed a motion to dismiss the lawsuit. Litigation will continue, but in the meantime, will the IRS view CVS customers’ donations to the ADA as eligible for charitable deductions, or not?
UK MPs to BP: Donate “wartime profits” to Ukraine or pay windfall tax. Members of Parliament from all parties have been pressuring the government to force oil giant BP to completely divest from Russia. BP holds a 19.75 percent stake in Rosneft, one of the Kremlin’s largest oil companies and has collected £3.75 billion in dividends since 2013. Lawmakers said if BP fails to donate Rosneft profits to the reconstruction of Ukraine, the UK would impose a special windfall tax on the firm.
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