Scott calls for “skin in the game,” but how much of whose skin? National Republican Senatorial Committee Chair Sen. Rick Scott proposes an 11-point plan to “Rescue America,” including a requirement that every American pay some federal income tax. TPC’s Howard Gleckman says new TPC estimates of a simple version of a plan like Scott’s could increase federal income taxes by more than $100 billion in 2022 alone. More than 80 percent of the tax increase would be paid by households making about $54,000 or less, and 97 percent would be paid by those making less than $100,000.
Emergency Ukraine spending bill tops Congress’s wish list. Congress is back in session this week. President Biden will deliver his state of the union address tomorrow. But much of the focus will be on the Russian invasion of Ukraine. A social spending and tax bill will take a back seat yet again—this time to emergency spending for Ukraine and Senate confirmation of Biden’s Supreme Court nominee, Judge Ketanji Brown Jackson.
The IRS has sent over $78 billion in refunds to 22 million filers. As of Feb. 18, the average refund was $3,536, up from last year’s average of $2,815. By law, the IRS couldn’t issue refunds for the earned income tax credit or the expanded child tax credit until mid-February. Those refunds should reach filers by March 1.
The tax gap has many shades of gray. The difference between taxes owed to the government and taxes collected—the “tax gap”—isn’t a black-and-white measure of tax evasion. TPC’s Janet Holtzblatt and Steve Rosenthal describe their new report co-authored with University of Chicago law professor Daniel Hemel. It explains the nuances and what it means for tax policy and administration. Three big take-aways: 1) the tax gap should not be a performance target, 2) the IRS needs skilled examiners and up-to-date technology to better address noncompliance, and 3) changes in the law are needed to tackle non-compliance.
ProPublica: Intuit faces more than $100 million in fees in TurboTax consumer fraud cases. The nonprofit news organization reports on how a Chicago law firm is trying to turn Intuit’s own customer arbitration requirements against the company in cases involving its participation in the Free File program. The firm bankrolled more than 100,000 individual claims against Intuit in 2020 that could cost the tax prep company more than $175 million in arbitration fees. The consumers claim Intuit illegally steered them away from FreeFile to paid products. Intuit denies the allegations.
Cannabis advocates urge low tax rates on legalized marijuana. Senate Democrats want to legalize marijuana at the federal level but have not yet finalized a tax regime. A discussion draft includes an excise tax that would start at 10 percent of the sales price and climb to 25 percent over five years. Tax credits would be available for small businesses. Industry and advocacy groups argue high taxes on legal marijuana will drive consumers to the illegal market. They say this is happening in states that already have legalized marijuana.
Politicians are in a foolish bidding war for a $1 billion stadium. TPC’s Howard Gleckman wonders why Virginia lawmakers are willing to authorize $1 billion in tax breaks to subsidize the Washington Commanders’ NFL team’s new stadium. He also wonders why lawmakers in Maryland and the District of Columbia are developing their own competing packages. Research finds that most stadiums are poor economic development investments that merely reallocate entertainment spending instead of increasing it.
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