Two appeals courts deliver opposing rulings on Affordable Care Act tax subsidies. The DC Circuit Court ruled yesterday that the tax credits can only go to residents in states that run their own  health exchanges. In Richmond, VA, the 4th Circuit Court said the ACA language isn’t clear, so the tax credits are also available in the 36 states with federal exchanges. The case is likely to end up before the Supreme Court. Stakes are high: More than 90 percent of people in federal exchanges got insurance with tax credit support. The average credit was $276 this year, lowering  the average monthly premium to $69. Inversions: Can’t live with ‘em, can’t retroactively kill ‘em? The Senate Finance Committee met yesterday to discuss international taxation, including the onslaught of corporate inversions. Committee Chair Ron Wyden wants the inversion loophole “plugged now.” Treasury’s Robert Stack repeated the Obama Administration’s call to “prevent companies from effectively renouncing their citizenship to get out of paying taxes.” Top Committee Republican  Orrin Hatch, against retroactive taxes and net tax increases, wants “to reform our tax code” instead. What happens when “flash boy” math wizards partner with investment banks? They end up under congressional scrutiny. The Senate’s Permanent Subcommittee on Investigations, in its hearing yesterday, pulled back the curtain on the “alchemy of derivatives” used by hedge fund manager Renaissance with Deutsche Bank and Barclays. TPC’s Steve Rosenthal testified that the derivatives owned by the banks but managed by Renaissance “stretched two key elements of the tax law” to convert short-term trading profits into long-term capital gains. He believes “Congress should address the taxation of derivatives comprehensively—to reflect the income from derivatives more clearly.” What happens when big money allows organizations to game the tax law? TPC’s Howard Gleckman explains how the IRS has the authority to enforce the tax laws stretched by a hedge fund or skirted by well-funded nonprofits. But it has no muscle: Its field audit rates for such entities are below 1 percent. That means wealthy organizations can easily avoid taxes and rarely get caught. With far less money, the average taxpayer can’t do that. If that seems unfair, it’s because it is. As for state tax receipts: TPC’s Norton Francis reviews why some states badly missed recent revenue forecasts. They expected unusually high 2012 revenue from capital gains to continue but were wrong, so their state  income tax payments came in well below expectations. Some states—like New Jersey—were surprised, with an ugly budgetary aftermath. Others—like California and Arizona—fared better with their planning. The House Child Tax Credit expansion bill will  likely die in the Senate. The House Rules Committee’s version includes a new provision opposed by Democrats that would require a taxpayer to report a  Social Security number  to claim the refundable portion of the credit. The bill would cost $114.9 billion over 10 years without requiring a Social Security number. With the number, the bill would likely cost less, as fewer people would be eligible to receive the refundable credit. The House is expected to vote later this week. Also on the Hill this morning: The Senate Finance Committee holds a hearing on “Saving for an Uncertain Future: How the ABLE Act Can Help People with Disabilities and their Families.” The ABLE act would allow families and people with disabilities to set up tax-free savings accounts to cover expenses such as housing, education, and transportation. Interested in subscribing to The Daily Deduction, the Tax Policy Center summary of the day’s tax news? Sign-up here for free access. If you’d like to tell us about a new research paper or have any comments about our new feature, write us at [email protected].