Last night’s debate featured some policy discussion! Donald Trump threatened a 45 percent tax on imports. Ted Cruz said his tax plan would be better than Trump’s high tariff. The candidates also shared—albeit briefly—how they would save Social Security and reduce the deficit. Problem is, as Urban Institute’s Gene Steuerle notes, “Because automatic spending growth now exceeds automatic revenue growth, no short-term belt-tightening can make much difference.” Marco Rubio had a good night, but not a good day: Senator Mike Lee, the co-author of his tax plan, has endorsed Ted Cruz. Lee, who is the first senator to back Cruz, urged Rubio to drop out.
On the Hill: A tax bill and a long-awaited approval. House Ways & Means Committee Chairman Kevin Brady proposed a “budget savings” package designed to cut $16 billion in two years. It would target overpayments in programs like the Affordable Care Act and ban undocumented immigrants from taking the child tax credit. Meanwhile, the Senate Banking Committee voted to approve Adam Szubin, nominated a year ago by President Obama to serve as Treasury’s undersecretary for terrorism and financial crimes. Committee chair Richard Shelby of Alabama wanted to win his primary before moving on nominations.
The IRS wants to give taxpayers overdue refunds. The agency announced yesterday that refunds totaling $950 million may await about 1 million taxpayers who didn’t file a return in 2012. They have until this year’s deadline, April 18, to collect. It will help if they’ve filed their 2013 and 2014 returns.
New York City called. It wants its money back. Apparently, GOP presidential candidate Donald Trump erroneously received an annual tax break of $300 for several years. Trump applied for the school district property tax break back in 1999, before a household income cap of $500,000 went into effect in 2011. Taxpayers are supposed to receive the credit after submitting proof of their incomes. Trump’s campaign manager said the GOP presidential hopeful may not have been known he was getting the credit: “Maybe $300 on other people’s taxes is a big deal, but not on his.”
Tax evasion in the Caymans? Cayman National Securities and Cayman National Trust pleaded guilty to conspiring with US taxpayers to hide over $130 million in offshore bank accounts from the IRS. The two institutions will have to pay $6 million in penalties and hand over account files of the scofflaw US taxpayers.
There’s a better way to rank a state as “high” or “low” tax. Rather than relying on per-capita-revenue, TPC’s Richard Auxier explains that knowing how much a state could raise—or knowing its revenue capacity—indicates whether a state relies too much or too little on taxes relative to a national average.
Save the date to find out what federal tax reform would mean for states. Proposals from presidential candidates and others would cut or increase taxes, tax consumption instead of income, overhaul business taxes, or introduce new levies such as carbon tax or a financial transaction tax. Their effects on individual tax burdens, state tax revenues, and state economies would vary widely. On March 31, the State and Local Finance Initiative and TPC will host a lunchtime forum to review the consequences.
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