The stopgap spending measure expires on February 18. Lawmakers face yet another deadline: They must finish an omnibus spending bill in less than three weeks. That must-pass bill, and an upcoming Senate battle over President Biden’s soon-to-be-named nominee to replace retiring Supreme Court Justice Breyer, will further distract the Senate from trying to put Biden’s Build Back Better plan back together again.
The CTC debate: It’s about more than a number. TPC’s Howard Gleckman dives into the key disagreement over the future of the Child Tax Credit (CTC). It “is about far more than a number. It is over the very nature of the credit: Is its primary purpose to reduce child poverty? Or is it largely to support middle-income (and even some high-income) families, as most conservatives say?” The dispute is profound, which is one reason why lawmakers struggle to reach consensus and make progress on the BBB.
Matheson: Fix the existing corporate tax before forging a new one. TPC’s Thornton Matheson argues for reform of the corporate income tax before adding an alternative like the 15 percent minimum tax on book income. The minimum tax would raise an estimated $320 billion over 10 years, but also would increase economic distortions and add administrative complexity.
If you file a paper tax return, will the IRS lose it? Yes, if you’re TPC’s Howard Gleckman. He recounts his 2020 adventures in tax filing—which includes the IRS processing his tax payment but claiming it never received his return. On the other hand, perhaps the IRS did get his return but sent an erroneous notice.
A solution: Stop sending the notices. News outlets report the IRS has suspended its notices notifying taxpayers that it did not receive their 2020 returns. Already facing the likelihood of a slow tax filing season, the agency may be looking to avoid getting more paper in the mail. The IRS notice claiming it did not receive 2020 returns requires tax filers to mail a new copy of last year’s return, just adding to the backlog.
Utah’s tax cut plans continue to gel. Utah’s Senate approved a bill last week to reduce the state’s income tax rate from 4.95 percent to 4.85 percent. The Utah House may add a Social Security tax credit and an earned income tax credit to the package.
In case you missed your TPC Prescription with Doug Elmendorf last week…. Elmendorf, dean and Don K. Price professor of public policy at Harvard Kennedy School and a former director of the Congressional Budget Office, talked with TPC’s Howard Gleckman about the current fiscal challenges facing policymakers, high inflation, and what aspects of Build Back Better could improve our long-term outlook. You can watch here.
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