But first, another kind of extension? House Speaker Mike Johnson (R-MO) has suggested moving funding deadlines for four agencies from March 1 to March 8. He’d push funding deadlines for the remaining eight departments from March 8 to March 22 — but only if there is a solid bipartisan agreement on how to move forward on 12 spending bills. That could be by assembling the funding bills into a series of “minibuses” that combine funding plans into one vote. A short-term stopgap bill will likely see a vote this week.
New CRS report examines TCJA’s passthrough deduction. The Congressional Research Service (CRS) report by Gary Guenther discusses the current understanding of the economic effects of the Section 199A deduction. Enacted under the Tax Cuts and Jobs Act (TCJA) in 2017 and set to expire in 2025, it allows owners of pass-through businesses to deduct up to 20 percent of their qualified business income from their taxable income. Guenther examines the deduction's impact on investment and employment, horizontal and vertical equity in the federal income tax, and taxpayer compliance and tax administration. The report provides an overview of policy options for Congress as it considers whether to extend the deduction after 2025.
National Treasury Employees Union: The IRS workforce could suffer a setback in a new administration. The National Treasury Employees Union (NTEU) obtained documents from the Office of Management and Budget produced during the Trump administration, reports TaxNotes. The documents suggest that at the time, the Trump administration was considering removing civil service protections from tens of thousands more federal government employees than previously thought, including frontline federal employees like office managers, administrative support assistants, cybersecurity specialists, IT specialists, and more.
Trade groups are fighting proposed sales tax expansion in Virginia. Republican Gov. Glenn Youngkin proposed, and state Democrats have endorsed, a plan to expand the state sales tax to cover digital goods. That would cover purchases like streaming subscriptions, cloud storage and online downloads. But the Northern Virginia Technology Council and other business lobbying groups say the General Assembly should reject the plan, even though it could raise $1 billion in revenue over the next two-year state budget.
Hong Kong will raise its tax on high earners. It will be the first such increase in twenty years and aims to lower the city’s HK$101.6 billion ($12.9 billion) fiscal deficit. In April a two-tiered tax system will go into effect. Those with incomes under HK$5 million ($640,000) will face a maximum tax of 15 percent. While those with higher incomes will face a tax rate of 16 percent. Currently, all individuals face a maximum tax rate of 15 percent. The change will affect 12,000 people, or 0.6 percent of Hong Kong taxpayers, and generate about HK$910 million in new annual revenue.
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].
