Congress is back with a big to-do list. But, as TaxNotes reports (paywall), Congress will be in session together for only 13 days, increasing pressure to pass a continuing resolution before federal government funding runs out on October 1.
Treasury has recovered nearly $1.3 billion in unpaid taxes from high earners. In the fall of 2023, with Inflation Reduction Act funding, the agency began pursuing 1,600 taxpayers with over $1 million in income and more than $250,000 in recognized tax debt. Since then, the IRS has recovered over $1.1 billion from those taxpayers. In February 2024, the IRS also began pursuing 125,000 high-income, high-wealth taxpayers who had not filed taxes since 2017. In six months, nearly 21,000 of these taxpayers have filed and paid a combined $172 million in taxes.
On Capitol Hill this week. On Wednesday, the Senate Budget Committee will hold a hearing with Social Security Administration Commissioner Martin O’Malley on delivering benefits and protecting retirement security, and the House Budget Committee will hold a hearing with Congressional Budget Office (CBO) Director Phillip Swagel to examine ways to improve the CBO. On Thursday, the Senate Finance Committee will hold a hearing on the 2025 tax policy debate and tax avoidance strategies.
A TPC event on Thursday on the Tax Cuts and Jobs Act of 2017. After the election, a major tax debate will focus on the fate of the TCJA, major portions of which expire at the end of 2025. If it expires, taxes will go up for nearly all American households. On Sept. 12, TPC and the Brookings Institution’s Hutchins Center on Fiscal and Monetary Policy will host authors of five recent Journal of Economic Perspectives papers. They’ll discuss the impact of the TCJA on individuals, businesses, and investors headed into the 2025 debate. Join in person or online.
More can be done to improve the Child and Dependent Care Credit. Senators Tim Kaine (D-VA) and Katie Britt (R-AL) have proposed legislation that would expand the child and dependent care credit, offering families a larger tax subsidy to offset some of their care expenses. TPC’s Margot Crandall-Hollick examines the legislation and finds that while the proposal would expand the value of the credit, other options could broaden the credit’s availability to low-income working parents who tend to receive little benefit from existing child care tax benefits.
The majority of states saw revenues decline in June. The latest release from TPC’s State and Local Finance Initiative reports that from July 2023 through June 2024, the median state saw a 2.1 percent decline in total state tax collections adjusted for inflation. Personal income taxes dropped by 2.7 percent, corporate income taxes fell by 5.9 percent, and sales taxes declined by 1.6 percent. “The long-term state tax revenue outlook remains uncertain due to several factors, including the upcoming presidential election and potential changes to federal tax policy,” TPC’s Lucy Dadayan writes. Access this report or monthly, quarterly, and annual 50-state detailed tax revenue databases here.
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