What will Senate lawmakers ask IRS Commissioner nominee Danny Werfel? Later today, the Senate Finance Committee will hold its confirmation hearing for President Biden’s pick to head up the IRS. Janet Holtzblatt looks at the questions Werfel is likely to face from lawmakers.
Tune in on Feb. 27: Can policymakers improve the predictability of tax credits for families? The earned income tax credit and child tax credit help many families cover expenses. But family dynamics and income volatility make it difficult for families to predict credit amounts, which makes household financial planning difficult. What can policymakers do to make it easier? Join the Urban-Brookings Tax Policy Center to hear from experts on the challenges and opportunities for distributing these benefits through the tax code. Learn more and register here.
Marriage costs Black couples more than white couples at tax time. In a new working paper, TPC’s Janet Holtzblatt, Bill Gale, Swati Joshi, and Nora Cahill report that white couples have on average an annual advantage of $662. Marriage can increase or decrease a couple’s tax bill. According to TPC’s analysis under 2018 tax law, Black couples paid an average of $148 more in income taxes due to marriage, while white couples saved an average of $514. They conclude that new methods to shed light on racial disparities, as used by TPC, open the door to a broader consideration of equity when designing tax policies.
Married millionaires in Massachusetts may be able to miss millionaires’ tax? Massachusetts’ 4 percent surtax on income over $1 million went into effect on Jan. 1. Tufts University estimates the tax could raise $1.3 billion in 2023. But the Massachusetts Budget and Policy Center warns in a new study that high-income married filers could avoid the tax by filing joint federal taxes but separate state taxes, to the tune of $200 million and $600 million in lost revenue. The proposed fix? A new state law to require filers to file federal and state returns similarly.
A land-value tax in Detroit? City officials are considering a change to the way Detroit taxes property. Right now, property taxes are based on an estimated value of land and buildings. Under a proposed change, some property levies would be replaced with a single tax on land value only. Owners of vacant land would see their tax bills climb, while owners of homes and commercial property would see lower bills. The idea aims to encourage more development of vacant land. The Wall Street Journal takes a deeper look (paywall).
Maine lawmaker proposes sales tax exemption for diapers. Under the bill co-sponsored by state Senate President Troy Jackson, disposable and reusable diapers would not be subject to Maine’s 5.5 percent sales tax. Twenty-one states currently exempt diapers from their sales tax.
After airing a documentary on Prime Minister Modi, BBC offices in India were searched by tax authorities. The Indian government banned a BBC documentary entitled “India: The Modi Question,” labeling it propaganda. India’s Income Tax Department is conducting a “survey” of BBC offices in New Delhi and Mumbai, collecting any information it deems useful. The BBC stands by its reporting and is cooperating with Indian tax officials.
For the latest tax news, subscribe to the Tax Policy Center’s Daily Deduction. Sign up here to have it delivered to your inbox weekdays at 8:00 am (Mondays only when Congress is in recess). We welcome tips on new research or other news. Email Renu Zaretsky at [email protected].
