Heeding the President’s order, the IRS will accept tax returns that lack ACA coverage information. The IRS had planned to reject returns that did not indicate whether a taxpayer had health care coverage in 2016 or paid an Affordable Care Act penalty. The IRS announced yesterday that it will continue to process those returns as it has in past years. The agency said it was responding to President Trump’s executive order requiring federal agencies to minimize the economic and regulatory burdens of the health law. Processing returns that fail to report lack of insurance coverage makes it impossible to enforce the penalties under the ACA’s individual mandate.
The President promises retailers a “massive tax plan” in the “not too distant future.” Retailers went to the White House yesterday to lobby against “border adjustability.” Trump did little to clarify his views on that issue. But he did, yet again, promise a big tax plan soon.
Mexico’s government isn’t too worried about a “border tax.” The country’s Economy Minister Ildefonso Guajardo doubts a border tax will be enacted. He’s talked with several advisors to President Trump, and has not seen common support for the idea. “I wouldn't be so certain that it will end up in the proposal," he said.
But Janet Yellen is not certain the dollar would adjust in response to the tax. The Fed chair told the House Financial Services Committee yesterday that “there’s great uncertainty with how, in reality, markets would respond to these changes….It’s very difficult to know just what would happen.”
Delayed tax returns + delayed filing = Longer economic hardship. TPC’s Elaine Maag finds that fewer people have filed returns early this year compared to recent years. Average refunds dropped, too. This could be due to the IRS delaying, under congressional mandate, Earned Income Tax Credit and Child Tax Credit refunds. Congress wants to reduce fraud, but it might be putting families in a bind. Elaine notes, "In a small survey of low-income tax returns…almost 80 percent of EITC and CTC filers with children who filed their returns early in the season reported high levels of material hardship."
The Kansas Senate will debate state Democrats’ tax plan today. The Ds’ plan would reinstate an income tax bracket of 6.45 percent for single filers making more than $35,000 and married filers earning more than $70,000. It also would close the “LLC loophole” that exempts from tax 330,000 pass-through businesses. The plan could raise more than $1.2 billion over the next two fiscal years.
An internet sales tax bill falters in Arkansas. The state’s Senate had already passed a bill that would require large online retailers to collect sales tax and use the revenue for future tax cuts. But the House version did not make it out of committee. It sunk because House Democrats wanted to earmark the revenue to help fund Medicaid, rural fire and police protection, pre-K education, and after- school programing.
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