Fed raises rates. More coming. The Federal Open Market Committee (FOMC) announced a quarter-point rate increase and signaled six more through 2022. The Fed projects higher inflation and lower growth than it estimated in December.
Has anybody seen a fiscal 2023 budget? House Majority Leader Steny Hoyer says he hopes the White House will release its long-awaited budget sometime over the next week. But no announcement yet from the Administration. More than a dozen states are cutting income taxes. CBS News reports on states flush with cash cutting their income taxes, noting TPC data that show state and local government revenues jumped 42 percent in the second quarter of 2021.
The latest example: Indiana. Gov. Eric Holcomb signed a $1.1 billion tax cut yesterday. It will reduce the state’s income tax rate from 3.23 percent to 2.9 percent over seven years. By 2023, the tax rate will fall to 3.15 percent, saving $50 for a person making $50,000 a year. Future rate cuts will occur only if prior year revenue growth reaches 2 percent.
Meanwhile, Alabama House passed a tax cut on retiree income, teeing it up for the Senate. Rep. Lynn Greer introduced the bill to exempt from Alabama’s income tax up to $6,000 in distributions from defined contribution plans by those age 65 and older. Greer estimates taxpayers would save between $230 and $240 a year. The House passed the bill last week, and the Senate is likely to pass it, too. Alabama already exempts defined benefit pension income from its income tax.
And Florida will eliminate tax on diapers this summer. The Senate approved the state budget this week, including a sales tax exemption for single-use diapers and reusable diaper inserts. The exemption from the 6 percent tax goes into effect on July 1.
Did Vanguard wrongly trigger huge tax bills for taxable brokerage account holders? Three investors sued the investment company, arguing that it violated its legal duties by triggering tax bills for some investors in its target-date funds. The bills amounted to hundreds of millions of dollars in the aggregate, according to the lawsuit filed this week. Vanguard made distributions in target-date funds that were at least 40 times higher than in previous years.
A look at state carbon pricing efforts. TPC will co-host a virtual event on March 30 to explore the role state-level carbon pricing initiatives play in US climate policy. The keynote speaker will be Rajinder Sahota, deputy executive officer for climate change and research at the California Air Resources Board. Following his talk, a panel of climate policy experts will offer their perspectives on the issue. For more details and to register, click here.
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