Congressional leaders reach a stopgap funding deal. Top lawmakers have a plan to keep the federal government funded until the middle of March, but the narrow Republican majority in the House could still complicate the bill’s passage, The Washington Post reports. The proposal would provide $100.4 billion for disaster aid and $10 billion in assistance for farmers, and a March 14 expiration date. Current funding expires on Friday.
Using current policy baseline for the Tax Cuts and Jobs Act (TCJA) could be risky. Via Politico (paywalled), soon-to-be Senate Finance Chair Tom Crapo’s (R-ID) hope to use a “current policy baseline” when calculating the cost of extending the individual income tax provisions of the TCJA beyond 2025 could have risks. Under a current policy baseline, official scorekeepers would assume that the TCJA tax cuts do not expire and therefore appear cost-neutral. However, budget expert Bill Hoagland, senior vice president at the Bipartisan Policy Center, said that the move could put Republicans “into a huge jam” since budget reconciliation rules prohibit measures that do not have a fiscal cost; this could allow Senate Democrats to challenge parts of the bill.
Medicaid and the ACA could be targets for spending cuts. Republican plans to extend individual provisions of the TCJA could raise the risk of cuts to the Affordable Care Act (ACA) and Medicaid, CBS News reports. Medicaid accounts for $600 billion in annual federal spending annually, and Republicans may seek to cap its funding in order to offset the cost of TCJA extensions. Southern states that depend heavily on the ACA may be hit hardest. Meanwhile, congressional Republicans sought to replace the ACA during Trump’s first term but legislation stalled in the Senate.
What might President-elect Trump’s plans mean for the IRS and tax compliance? President-elect Donald Trump’s personnel choices and funding priorities could signal significant changes for the IRS, including potential budget cuts and leadership overhauls, warns TPC’s Howard Gleckman.
No tax on tips in Virginia? In an announcement this week, Republican Gov. Glenn Youngkin proposed exempting tips from Virginia’s state income tax, at a cost of about $70 million a year. The Virginia Department of Taxation and the Virginia Employment Commission estimate that over a quarter-million Virginians work in jobs that can receive tips. Tip-earners would be able to deduct tips from income reported on their state tax return, if the income is included in the federal adjusted gross income.
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