TPC examines tariff refund credits. Since the US Supreme Court ruled that the International Emergency Economic Powers Act (IEEPA) did not grant President Trump tariff authority, the federal government has repaid about $70 billion (as of June 30) to the businesses that paid those levies. But economists generally view tariffs as burdening all US residents through increases in prices and reductions in income. TPC finds that the tariffs reduced families’ inflation-adjusted after-tax income by $1,250 on average, with burdens ranging from $230 for families in the lowest income quintile to $4,430 for families in the top quintile. In a new report, TPC considers four options for refundable tax credits that would offset some of the burden of IEEPA tariffs.
Uncapping Social Security payroll taxes would not save Social Security. TPC estimates a proposal to apply Social Security's 12.4 percent payroll tax to all annual earnings rather than just an individual's first $184,500 would raise about $2.5 trillion from 2026 through 2036 and, in 2026, increase taxes for about 6 percent of tax units by an average of about $22,000. TPC’s Jessica Riedl argues that the proposal, offered by Sens. Bernie Moreno (R-OH) and Elizabeth Warren (D-MA), would raise substantial revenue but, by itself, still fall short of fixing Social Security: The program would return to deficits in four years, the link between contributions and benefits would be severed, marginal tax rates could rise too high, and other policy priorities could be neglected.
Senate Finance Committee to consider trade and Treasury nominees. The Senate Finance Committee will hold an executive session tomorrow to consider five nominees to the US International Trade Commission. The panel also will hold a separate hearing Thursday on Treasury nominees, including Francis Brooke to be deputy secretary, Erin Browne to be under secretary, and Sriprakash Kothari and George McMaster to be assistant secretaries. The nominations come as Treasury and trade agencies face ongoing questions over tariffs, tax guidance, and the administration of recent tax law changes.
CRS reports on all the ways the tax code offers marriage penalties and bonuses. Marriage penalties and bonuses arise because income taxes for married couples generally are based on the combined income of a couple, not on the individual income of each spouse. In a new report, the Congressional Research Service (CRS) shares a comprehensive accounting of every federal tax provision creating a marriage penalty or bonus and presents policy options for eliminating or reducing penalties. The report notes that roughly two in five couples face a marriage penalty, averaging about $2,000, while slightly more couples receive a marriage bonus, often averaging between $3,000 and $5,000. And TPC researchers estimate that on average, Black couples pay more in individual income taxes if they are married and white couples pay less—an annual advantage of about $660 for white married couples relative to Black couples.
New York City second-home tax raises implementation concerns. Real estate lawyers and brokers are pressing New York City officials for more guidance on a new tax on luxury second homes, reports Bloomberg (paywall). The tax, enacted as part of the state budget in May, is expected to raise $500 million this fiscal year and help close the city’s budget gap. Commenters at a Department of Finance hearing said the proposed rules leave unresolved questions about temporary vacancies, rental units, trusts, co-op liability, and how values will be determined. The tax will initially apply different rates to single-family homes, condos, and co-ops before the city revises its valuation system in 2028.
Itemized: Fact of the Week. TPC estimates that extending the deductions for qualified tips, overtime, vehicle loan interest, and the $6,000 deduction for qualified seniors would cost $470.5 billion over the 2027–2036 period. The provisions are currently set to sunset at the end of 2028.
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