Former President Trump’s tax returns are out, but “Where are the IRS workpapers?” TPC’s Steve Rosenthal asks the question. He told The Hill “I thought the Ways and Means Committee was sharing Trump’s tax returns to allow the public to assess the IRS audit. The Joint Tax Committee reported the IRS audit was abysmal, which seems correct. But Joint Tax used the IRS workpapers to illuminate [Trump’s returns]. We ought to see them also.”
Thursday’s episode of The Prescription: Rutgers’ Jacob Bastian talks about the Child Tax Credit. Congress failed to reach an end-of-year agreement on CTC expansion, largely due to a dispute over whether the credit can significantly reduce child poverty without materially reducing incentives to work. Bastian’s research concludes it can, but others disagree. He’ll discuss his conclusions Thursday at Noon. Register and tune in here.
EV credit guidance. Treasury says it won’t issue before March much-awaited guidance of what electric vehicles qualify for a tax credit of up to $7.500 included in the Inflation Reduction Act. Until the Treasury explains how vehicle batteries and components qualify, the credit amount will be based on a much more flexible battery capacity standard. Treasury also released a white paper and consumer FAQs to help buyers sort through the credit.
House Republicans will pick their leaders today. Or not. Rep. Kevin McCarthy still is scrambling to round up the votes he needs to become Speaker, but other lawmakers are waiting in the wings if he stumbles. Republicans also will vote today on a package of new House rules that would make it easier to cut taxes even if it adds to the deficit, require a three-fifths supermajority to pass tax rate increases, and order the Congressional Budget Office and Joint Committee on Taxation to incorporate macroeconomic effects in their revenue estimates.
New year, renewed recession risk? Researchers at the Federal Reserve Bank of Philadelphia conclude if 26 states experience negative growth, the economy could be entering a recession. Last week, the Federal Reserve Bank of St. Louis released research that shows economic growth in 27 states was negative in October. Their analysis was based on the measure of state coincident indexes that combines employment, average hours worked in manufacturing, the unemployment rate, and wages and salary.
New year, new tax cuts. The Associated Press reports on permanent tax cuts and one-time rebates that go into effect in 2023, largely thanks to large budget surpluses. Idaho, Indiana, Kentucky, Mississippi, Missouri, Nebraska, New York, North Carolina, and South Carolina all cut income taxes. Arizona’s flat 2.5 percent income tax goes into effect this month. Iowa is restructuring its tax brackets and will stop taxing retirement income. Kansas and Virginia will reduce sales tax on groceries, while Virginia and Colorado will exempt hygiene products from sales tax.
But in Colorado and Kentucky, the new year means new taxes, too. Colorado now is levying a 10-cent fee on plastic bags as a precursor to banning them in 2024. And Kentucky’s 6 percent sales tax now applies to 30 new service categories, including personal fitness training, rideshares, and cosmetic surgery.
No dry January (or 2023) in Dubai? The emirate has lifted its 30 percent tax on alcohol sales for a one-year trial period. It also dropped a tax required to buy alcohol in certain commercial districts. The move could boost Dubai’s appeal to tourists and expatriates. Alcohol remains subject to a 5 percent value-added tax.
Drink a soda out of a plastic cup in Israel? New Finance Minister Bezalel Smotrich plans to repeal taxes on single-use plasticware and sugar-sweetened beverages that were adopted by the outgoing government. The Israel Tax Authority predicts the move repeal will reduce annual tax revenue by $340 million. Despite claims the tax targeted the ultra-Orthodox community, The Israeli Association of Public Health Physicians says, “data from the finance and health ministries indicate that the tax led to a decrease in consumption [of sweetened drinks] for the benefit of Israelis, including the ultra-Orthodox population.”
For the latest tax news, subscribe to the Tax Policy Center’s Daily Deduction. Sign up here to have it delivered to your inbox weekdays at 8:00 am (Mondays only when Congress is in recess). We welcome tips on new research or other news. Email Renu Zaretsky at [email protected].
