Preparing for the post-election tax debate. TPC’s John Buhl charts a possible course for Congress after the election. Business taxes and the Child Tax Credit (CTC) likely will lead the way. That’s because a few major business tax deductions have or are about to become less generous. Republicans could trade an increase in the CTC amount for Democratic support for renewing business tax breaks such as immediate expensing for research and development costs. But it will be much tougher to pass any bigger bipartisan effort in a short lame-duck session.
EU, South Korea urge the US to reconsider EV production tax breaks. European Union officials say the Inflation Reduction Act’s tax credits for US-made electric vehicles and batteries may violate World Trade Organization rules by discriminating against electric vehicles produced outside of the US. The Financial Times reports (paywall) the European commission is conducting an “exhaustive” survey to determine how many European firms may shift supply chains to the US to benefit from the tax breaks. South Korea has raised similar objections to the Buy America tax breaks.
Losing the charitable deduction didn’t change donor behavior very much. Data from federal income tax returns suggested a big drop-off in charitable deductions after Tax Cut and Jobs Act raised the standard deduction and reduced incentives to deduct charitable contributions. But TPC’s Rob McClelland finds that while charitable contributions reported on federal tax forms fell by 23 percent from 2017 to 2018, tax data from several states showed a much smaller decline.
What does Boston’s expanded CTC outreach to immigrant communities teach us? TPC’s Aravind Boddupalli, Louisa Godinez-Puig, and Livia Mucciolo share findings from their new report. Their conclusions: Trusted messengers must deliver clear and concise information to immigrant households, and service providers must reduce administrative barriers unique to immigrant communities.
Congress wouldn’t raise taxes on the rich, but these states may. Although Congress scrapped President Biden’s many proposals to raise taxes on high-income households, voters in California and Massachusetts put initiatives on the November ballot to do just that. TPC’s Howard Gleckman looks at what those initiatives would do and what they may say about future efforts.
In November: Voters in three states will weigh consequences of earmarking tax dollars. TPC’s Tax Hound considers ballot initiatives in Arizona, Massachusetts, and California from a different perspective. Each would give today’s voters more power to decide how tomorrow’s tax dollars will be spent. That would limit a state’s ability to anticipate and respond to future financial challenges. Voters will need to decide: Is that power worth it?
How to tax a marshmallow? A court in Britain decided. In the United Kingdom, a standard marshmallow is subject to a value-added tax (VAT) of 20 percent because it’s candy. But the First-Tier Tribunal in the United Kingdom, a court that examines how to tax foods, games, and even television personalities, ruled that Innovative Bites Limited can sell extra-large Mega Marshmallows VAT-free, because they’re food. They have very detailed reasoning, but the bottom line is they’re used to make another food: S’mores. Happy roasting.
Deadline Dec. 1: Call for papers for the 13th Annual IRS-TPC Joint Research Conference on Tax Administration. It’s already that time. Next year’s conference takes place at the Urban Institute on June 22. Possible paper topics include measuring and influencing taxpayer compliance, estimating compliance costs, complexity, administration, and taxpayer behavior. E-mail proposals to: [email protected] with "proposed paper" in the subject line. Completed papers will be due by Monday, May 22, 2023.
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