Democratic lawmakers sound the alarm over IRS data access. Democratic Senators Ron Wyden and Elizabeth Warren are raising red flags over the potential access of Elon Musk’s Department of Government Efficiency (DOGE) to IRS taxpayer data. The senators cite media reports that the White House and DOGE are pressuring the IRS to approve a memorandum of understanding to grant Musk’s software engineers access to sensitive taxpayer information. Critics worry that such access could violate legal protections and undermine taxpayer privacy and administration.
IRS layoffs loom in the middle of tax season. As tax season ramps up, the IRS is planning to lay off thousands of probationary workers, a move that could disrupt operations at the agency. The layoffs are part of a broader Trump administration effort to reduce the federal workforce, with probationary employees—those with less than a year of service—facing layoffs first. While the full impact remains unclear, the move raises concerns about potential delays in tax processing and enforcement, especially as the IRS handles over 140 million tax returns before the April 15 deadline.
A newborn credit has advantages over a pregnant mother credit to support growing families. TPC’s Margot Crandall-Hollick considers the likely administrative barriers of a proposed tax credit for pregnant mother’s credit, part of the Family First Act introduced by Rep. Blake Moore (R-UT). A newborn credit, Crandall-Hollick notes, “would be simpler for the IRS to administer and easier for tax filers to claim, and it would provide the same benefits to families in the year a child is born.”
What could a federal funding freeze mean for states and localities? Uncertainty surrounding the Trump administration’s effort to pause federal payments to state and local governments has raised questions about the services these governments provide. A Tax Policy Center analysis finds that federal grants account for about one-third of state budgets and cover over half of state healthcare and public assistance spending. If funding stalls, states may struggle to maintain services, as they typically cannot borrow to cover shortfalls.
Gov. DeSantis floats the elimination of property taxes in Florida. Florida Governor Ron DeSantis (R) suggested he would support a constitutional amendment to abolish property taxes in the state, responding to social media users calling for tax reform. Florida’s property taxes are slightly higher, per capita, than the average among states in the South Atlantic region. But Florida also stands out from its neighbors by not having an individual income tax. DeSantis did not specify how the state would make up for lost property tax revenue. Any change would require 60 percent voter approval in a statewide referendum.
Tax policy affects racial groups differently in subtle ways. While the US tax code does not explicitly consider race, a TPC analysis highlights how different economic factors contribute to racial disparities in tax burdens. White households, on average, earn more income and benefit more from lower effective tax rates often applied to capital income. Black and Hispanic households tend to rely more on labor income (which faces individual income tax rates, which are typical higher than those imposed on capital gains) and refundable tax credits.
The Daily Deduction will next publish on Monday, February 24.
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