Biden’s pandemic relief plan would cut taxes for low- and moderate-income households. TPC’s Howard Gleckman reviews President-elect Joe Biden’s $1.9 trillion plan. Among the provisions: It would increase the $600 per person direct payment by an additional $1,400, increase weekly federal unemployment assistance to $400 through September, and provide $350 billion in unrestricted funding for state and local governments, plus $170 billion for schools. Among tax provisions: He would also increase and make the Child Tax Credit fully refundable for 2021 and expand eligibility to 17-year-olds. He’d also expand the Earned Income Tax Credit and the Child and Dependent Care Tax Credit.
Wyden and Neal outline their tax priorities. Ways & Means Committee Chair Richard Neal and incoming Finance Committee chair Ron Wyden have outlined their tax agendas for 2021, and many of their ideas are in sync with President-elect Biden. Neal highlighted expansions of refundable credits such as the Earned Income Tax Credit, the Child Tax Credit, and the Child and Dependent Care Tax Credit, as well as expansion of tax breaks to encourage retirement savings. Wyden’s priorities include a measure to tax accrued capital gains annually, even if gains are not realized.
Democrats might want to cut the SALT cap, but a SALT cap substitute would be better. TPC’s Len Burman, Tracy Gordon, and Nikhita Airi write that Congress could help state and local governments build their reserves without repealing the federal $10,000 cap on state and local tax deductions. Instead, they suggest using the $80 billion that Treasury loses annually through the SALT deduction to fund a State Macroeconomic Insurance Fund. It would help individual states during economic downturns and lessen the severity and duration of recessions for the whole country.
Tune in Thursday at noon for The Prescription with IRS Commissioner Charles Rettig. TPC’s Howard Gleckman will talk with Commissioner Rettig about how the IRS has dealt with the challenges of operating the tax system during a pandemic, how the IRS is preparing for the upcoming income tax filing season, and the Service’s role in delivering relief payments during the COVID-19 pandemic.
Tax season will start February 12, instead of late January. The IRS announced the delay last week. The IRS handled a much longer tax-filing season in 2020, had to deal with facility closures due to the pandemic, and distributed two stimulus payments. The service urges households claiming refunds to file electronically with direct deposit. The IRS expects 90 percent of taxpayers who expect a refund will get one within 21 days, absent any issues with their returns. The tax filing deadline remains April 15.
New York City expects property tax revenues to decline sharply next year. Mayor Bill De Blasio expects city revenues could decline by $2.5 billion next year, the largest drop in at least 30 years. Roughly half the city’s tax revenue comes from real estate, and the value of office buildings and hotel properties has fallen by 15.8 percent during the pandemic. The city can partially offset some of the loss with increased income tax revenues, but spending cuts are on the horizon.
The Daily Deduction will resume its regular schedule on January 21, after Inauguration Day.
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