The federal government remains closed. Federal spending authority ended at midnight on Saturday, January 20. Senate dealmakers have been at work over the weekend to find a way out of their impasse. They’re still looking. The Senate plans another vote at noon today to temporarily fund the government through February 8.
Tax season opens next week. The shutdown will likely delay refunds. The IRS has also suspended audits, non-automated collections, and processing 1040X amended returns. Also on ice: writing regulations needed to fill in many of the blanks in the Tax Cuts and Jobs Act. Of the Treasury Department's 88,268 workers, over 83 percent were not able to report to work today.
About those new tax cuts: What happens if there’s another recession? The Wall Street Journal considers the question (paywall). The CBO expects the new tax law to drive the US debt-to-GDP ratio to 97.5 percent over the next ten years—up from 91 percent before the law passed. A new analysis co-authored by Christina Romer, a top economic adviser to former President Barack Obama, finds that countries with lower debt-to-GDP ratios were better able to respond to a fiscal downturns by cutting interest rates to stimulate growth.
What if homeowners paid property taxes monthly? The Lincoln Institute of Land Policy has a new report that considers improvements to property tax collection. Rather than requiring residents to pay the taxes in one or two lump sums per year, local governments could allow them to pay property taxes on a monthly basis. This could benefit homeowners who do not pay their taxes through an escrow account. The report describes two approaches for allowing monthly property tax payments and outlines some best practices to enhance the effectiveness of these programs.
India’s government sends tax notices to cryptocurrency traders. The country’s treasury apparently took note of a national survey finding: Indians have traded more than $3.5 billion in cryptocurrencies over a 17-month period. The government expects traders to pay any capital gains tax due, but it’s not clear whether traders will comply. The Indian government likened the digital currency to a “Ponzi scheme,” but has not curbed trading. Each month, 200,000 additional Indians speculate in bitcoin and the like.
If you’d like to tell us about a new research paper or have any comments about the Daily Deduction, TPC’s summary of the day’s tax news, write Renu Zaretsky at [email protected]. You can sign up here to receive the Daily Deduction as an email newsletter every weekday morning (Mondays only when Congress is in recess) at 8:00 am.
