Revised: There’s good news and bad news about the deficit. The Congressional Budget Office released its fiscal year-end review that shows a federal budget deficit of $1.4 trillion in fiscal year 2022. That’s roughly half of last year’s $2.8 trillion deficit but $341 billion larger than CBO’s May 2022 projections. The big reason: $426 billion in costs from President Biden’s student debt forgiveness program.
Fired: UK Prime Minister Truss dumps her Chancellor, and her tax cuts. Said new PM Liz Truss, “It is clear that parts of our mini budget went further and faster than markets were expecting.” She fired Chancellor of the Exchequer Kwasi Kwarteng, who she blamed for the tax cuts, though she ran on them to win Tory support for her party leadership bid. Truss replaced him with Jeremy Hunt, who said, “We have to be honest with people and we are going to have to take some very difficult decisions both on spending and on tax.” Truss plans to release her new economic plan on Oct. 31.
Miscounted: There may be a $1.4 billion error in Massachusetts tax rebate checks. A rarely used state law triggered tax rebate checks. But the Massachusetts Budget and Policy Center says the rebate formula is fundamentally flawed: While the state certified $2.9 billion in excess tax collections, nearly half reflects a timing mismatch between excise tax payments by owners of pass-through businesses and their claims for personal income tax credits. It also says “most of this $1.4 billion overstatement will flow to the state’s highest-income households.”
Blocked: Mississippi court denies tax dollars for private school grants. Hinds County Chancery Judge Crystal Wise Martin blocked a state law that directed $10 million in federal pandemic relief money to infrastructure grants for private schools. She wrote, “Any appropriation of public funds to be received by private schools adversely affects [public] schools and their students.”
Proposed: West Virginia governor proposes a refundable tax credit. Gov. Jim Justice’s draft bill includes an income tax credit to offset personal property taxes on vehicles. Justice’s plan is an effort to sidetrack a state ballot initiative that calls on the legislature to repeal the car tax.
Cut: CVS reduced prices on store-branded menstrual products and promises to pay customers’ sales taxes in 12 states. The national drugstore chain has cut prices by 25 percent on its branded menstrual products and began paying sales taxes for customers in Arkansas, Georgia, Hawaii, Louisiana, Missouri, South Carolina, Tennessee, Texas, Utah, Virginia, Wisconsin, and West Virginia. Other states bar third parties from paying taxes on a customer’s behalf. Across all brands, tampon prices increased 12.2 percent at retail stores for the year ending October 2; prices for liners increased 11.6 percent.
Disappeared: Ink on a check to the IRS. San Francisco taxpayer Lou Ann Bassan filed a petition with the US Tax Court to dispute an IRS penalty, along with a check for the $60 filing fee. Weeks later, the Tax Court returned her check--because it was blank. Turns out when the postal service irradiated her check—something it has been doing since the 2001 anthrax scare, the ink disappeared. The IRS waived the tax penalty. The US Tax Court says ‘ink disappears from its mail ‘on occasion’" but says there is no need to use special ink to write a check to the court.
Uploaded: A data tax? University of California, Irvine tax law professor Omri Marian will be the guest on TPC’s webcast The Prescription this Thursday at Noon. He’ll discuss his plan to tax data that is uploaded and downloaded by large tech companies. The levy would replace, at least in part, the corporate income tax. Register here.
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