JCT: Build Back Better Would Raise $1.5 trillion in tax revenue over 10 years. The Joint Committee on Taxation estimated tax revenues would come close to paying for the big spending bill over the next decade. The biggest revenue raisers include the corporate minimum tax on book income, the excise tax on stock buybacks, major international tax changes, and several new or expanded levies on high-income households. The JCT score does not include the proposed increases in IRS funding or provisions to lower Medicare drug costs.
The latest SALT cap fix would cut taxes by an average of $20 for middle-income households. TPC’s Howard Gleckman reviews TPC’s estimates of the latest House Democratic plan. It would raise the cap from $10,000 to $72,500 starting this year and remain in effect through 2031. TPC estimates that in 2021, only about 1.6 percent of middle-income households (those making between about $54,000 and $96,000) would receive any benefit from the increased cap. By contrast, the average tax cut for those earning between $366,000 and $867,000 would be $4,600. Democratic senators say they are developing an alternative.
Gale: It’s time for public finance scholars to study racism in the tax code. TPC’s Bill Gale explores some of the links between race and tax policy in his new paper “Public Finance and Racism.” He finds that challenges to incorporating race-related considerations into analysis of public finance are surmountable and the opportunities are enormous. He suggests public finance economists and other scholars studying race issues can learn from each other and economics can complement other approaches.
Voters rejected more taxes in Washington and Colorado this week. Washington State residents, in a non-binding vote, said Tuesday the state should not assess a capital gains tax on high-income earners. Colorado voters said no to a 5 percent excise tax on cannabis sales that would have funded tutoring and enrichment programs for K-12 students.
British woman wins legal challenge to Australia’s “backpacker tax.” She argued that Australia unfairly taxed her pay while she worked as a server in Sydney in 2017. That year, Australia established the tax on those holding working holiday visas. Attorneys for Catherine Addy said the tax conflicted with an international “double tax” agreement among Australia, Britain, and several other countries. The court agreed that citizens of those countries should be taxed like Australians.
A Diwali gift? The Indian government cut taxes on gas and diesel. This week the world’s largest democracy reduced the excise tax on fuel by 5 rupees or about 6 cents per liter of gasoline and by 10 rupees or about 13 cents per liter of diesel. The idea: Improve consumer sentiment in the wake of the pandemic. At least ten states ruled by Prime Minister Narendra Modi's Bharatiya Janata Party (BJP) or his allies also plan to reduce local fuel taxes by as much as 7 rupees a liter.
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