President Biden’s budget includes a 20 percent minimum tax on the wealthy. Under his plan due to be released today, households with a net worth exceeding $100 million would face a 20 minimum tax on income, including unrealized capital gains. Individuals who already pay an effective income tax rate of 20 percent would be exempt. The tax would apply to about 20,000 households, but more than half the revenue would come from households worth more than $1 billion, the White House estimates. The Administration says the tax would raise about $360 billion over ten years.
Will the IRS clear its backlog of unprocessed tax returns? According to former IRS officials, it will be exceedingly difficult by the end of this year. Administering stimulus checks during the pandemic exponentially increased the agency’s workload. And staffing needs for the current filing season are dire and won’t be resolved by a new hiring initiative. TPC’s Janet Holtzblatt told The Hill, “They won’t get five thousand people on board before the filing season is over. You have to find people, you have to bring them on board, and then you have to train them.” While “the speed at which they got all of the [stimulus checks] out there was unprecedented… it came at a cost.”
Rick Scott still wants everyone to pay some federal income tax. The Florida Republican was given a chance to walk back his recent proposal to require all Americans to pay income tax in a Fox News interview yesterday. He passed, though his proposal has become fodder for Democratic ads, and most of his Senate GOP colleagues have walked away from it. About 42 percent of households will not pay federal income tax this year, mostly because their incomes are too low. But Scott’s view is unchanged: “That’s not right. They ought to have some skin in the game.”
New research: Is progressive taxation possible in states with constitutional flat taxation? Loyola University Chicago School of Law’s Samuel Brunson argues “yes” in a forthcoming paper. “Through the use of a flat-rate income tax with a refundable tax credit states can enact a flat-rate income tax that is simultaneously remarkably progressive and is more economically efficient than an income tax with progressive marginal rates.”
Mississippi lawmakers agree on state income tax cuts. House and Senate leaders agreed to reduce the income tax by eliminating the 4 percent bracket next year, then gradually reducing the 5 percent income tax bracket to 4 percent. The full House and Senate still must approve the plan. Gov. Tate Reeves prefers eliminating the income tax.
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