What will become of the expanded CTC? The more generous, monthly Child Tax Credit payments expired in December after Congress failed to agree on a Build Back Better bill to continue the expanded program. BBB foundered in part because Sen. Joe Manchin opposed a simple extension of the CTC. Now, Manchin says he’s open to a bill that retains the more generous credit, but not for upper middle-income households.
Unanticipated consequences. TPC’s Elaine Maag warned yesterday that limiting the credit to low- and moderate-income households may have other consequences. “For higher income families, the CTC replaces the personal exemption for dependents. If we reduce the [income] caps, we're no longer making an adjustment for family size…. Will limiting the CTC too much now create more pressure for the personal exemption for dependents to return?” The personal exemption was temporarily repealed by the 2017 Tax Cuts and Jobs Act but is scheduled to resume after 2025.
Are Democrats pivoting away from BBB, at least for now? Senate Majority Leader Chuck Schumer says Democrats will push for rules changes by mid-January that would allow consideration of a voting rights bill. Breaking the filibuster for legislation would be a sea change for the Senate and would require the support of all 50 Democrats. But senators Manchin and Kyrsten Sinema (and others) have opposed the idea. An intense debate over the filibuster and voting rights could further stall BBB.
Texas’ sales tax revenues up 24 percent in December 2021 compared to 2020. Comptroller Glenn Hegar reported $3.56 billion in December also were up about 18 percent from 2019. Total sales tax revenue for the quarter ending in December 2021 also was substantially higher than in 2020 and in the pre-pandemic fourth quarter of 2019. Sales taxes bring in 59 percent of all tax collections in Texas.
Florida tax revenues are up, too. In November the state collected $398.8 million more in general revenue taxes than expected. The state Legislature’s Office of Economic & Demographic Research noted that “November collections reflect activity that largely occurred in October, which continued to benefit from the Advance Child Tax Credit payments, redirected spending from the hard-hit service sector, and some consumers’ ability to draw down atypically large savings that built up during the pandemic.”
New York State’s tax fraud investigation of Trump Organization targets Trump children. New York Attorney General Letitia James subpoenaed Ivanka Trump and Donald Trump, Jr in her civil tax fraud investigation. She wants testimony and documents regarding “the valuation of properties owned or controlled by Donald J. Trump or the Trump Organization.” She also wants to depose former President Trump. All three Trumps are challenging the subpoenas.
This Week’s Prescription: Brookings’ David Wessel on opportunity zones. The director of the Hutchins Center on Fiscal and Monetary Policy and former Wall Street Journal reporter will discuss his recent book “Only the Rich Can Play.” The book puts the 2017 economic development slice of the Tax Cuts and Jobs Act under a political and policy microscope. Join David and TPC senior fellow Howard Gleckman for their conversation this Thursday at Noon. Register here
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