House Ways & Means completes its markup of Chairman Neal’s tax bill. The committee advanced the tax-related section of Democrats’ $3.5 trillion spending package. The bill extends more generous tax credits for low- and middle-income families as well as renewable energy and increases taxes on high-income individuals, large estates, and corporations. The package would help finance the $3.5 trillion social spending bill Congress is considering. Depending on the outcome of ongoing negotiations in both the House and Senate the measure could well be revised before it reaches the House floor.
The expanded advance Child Tax Credit will help families pay bills; but some don’t know they are eligible. TPC’s Elaine Maag and Urban Institute colleagues Poonam Gupta and Elaine Waxman report on a new IPSOS survey and Urban Institute interviews of families. Many report they’ll use the monthly payments for rent, utilities, and overdue bills. The interviews also show that most people know the credit was expanded under the American Rescue Plan, but some are unsure if they are eligible.
For the top one percent of earners, effective tax rates have fallen since World War II. TPC’s Robert McClelland explains the latest TPC measures of effective tax rates, (the result of dividing total personal income tax by adjusted gross income plus capital gains that were realized but untaxed). “While average effective tax rates barely changed in the US from 1945 to 2015, the average tax rates of high-income households fell sharply—from about 50 percent to 25 percent for the highest income 0.01 percent and from about 40 percent to about 25 percent for the top 1 percent.”
Tune in at noon today for your Prescription with Valerie Wilson. The director of the Economic Policy Institute’s Program on Race, Ethnicity, and the Economy will discuss how the budget and tax provisions being debated in Congress address economic inequities. Register and tune in to her conversation with TPC’s John Buhl here.
Check out TPC’s State Tax and Economic Review of the first quarter of 2021. TPC’s Lucy Dadayan writes that states reported strong revenue growth in the first quarter of this year, but with large variation across states. Overall state tax revenues were stronger during the pandemic than initially feared, thanks in part to federal stimulus. But Lucy concludes that states still need to be conservative in their budget and forecasting given the high level of remaining uncertainty around economic and public health conditions.
Congress is not in session. The Daily Deduction will return Monday to its regular schedule.
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