Senate votes to repeal a tax hike on Gold Star military families. The bipartisan bill corrects a provision of the Tax Cuts and Jobs Act that taxes the military survivor benefits of children as if they were trust income. The bill would treat the benefits as earned income and apply retroactively to tax years starting in 2018. The House is planning to add the “Gold Star” measure to a larger retirement bill this week. It is not clear what happens next.
Will a debt limit increase be part of a spending deal? Senate Minority Leader Chuck Schumer says that White House officials and party leaders agree that a debt limit increase should be part of any budget deal, though they have yet to work out specifics. Congressional leaders and White House staff met for two hours yesterday and Schumer reported “progress.” But the session broke up last evening without an agreement. The bipartisan congressional leadership favors combining a debt limit hike with increases in defense and non-defense budgetary caps.
A universal earned income tax credit could end poverty for US workers and boost the middle class. TPC’s Len Burman describes his new proposal for a universal earned income tax credit (UEITC)—a one-for-one match on the first $10,000 of earnings delivered through a refundable tax credit. “It’s like the existing earned income tax credit, but it is bigger, doesn’t phase out, and is available to every worker regardless of marital status or household income.” Len would fund the credit with a value-added tax.
Governor JB Pritzker’s plan for a graduated income tax in Illinois continues to advance. The state Senate passed the measure on May 1, and this week the House Revenue and Finance Committee approved the proposed state constitutional amendment. The bill must pass the House by a three-fourths majority before voters can weigh in on the November 2020 ballot. House Democrats would need all but three of their 74 members to reach that threshold. The measure would replace Illinois” flat income tax rate of 4.95 percent with graduated rates of up to nearly 8 percent.
New York lawmakers may vote today to give Congress access to President Trump’s state tax returns. The lawmakers have narrowed the bill: Congress would have access only to those state tax returns filed by federal, state, and local elected officials and higher-level appointees as well entities they control or have a large stake in. The revised bill says the state would turn over returns to any one of three congressional committees that request them for any "legitimate task” of Congress. The state would redact any federal tax information that appears alongside state returns. Governor Cuomo says he will sign the bill if it reaches his desk.
Churches sue the city of Magnolia, Texas for using water fees to offset tax exemptions. Counsel for the churches accuse the city of unlawfully targeting churches in assessing water fees. Magnolia changed the status of the churches from "commercial" to "institutional," which triples or quadruples the cost of water. The plaintiffs argue that this violates the Texas Religious Freedom Restoration Act since “it places a real and significant—i.e., substantial—burden on the churches’ and their members’ free exercise of religion.” The City of Magnolia has not responded.
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