A Move To Limit The Salt Cap
Sanders would partially repeal the SALT cap. Senate Budget Committee chair Bernie Sanders will include a partial repeal of the Tax Cut and Jobs Act’s $10,000 cap on the state and local tax (SALT) deduction in his proposed budget resolution. He has not described details but says the cap likely would remain for high-income households. Sanders is drafting a budget bill that would likely need all Democrats to win Senate approval under the reconciliation process.
Reuters: US companies would still pay less income tax than overseas competition under President Biden’s proposed corporate tax hike. A Reuters analysis of hundreds of filings by US and international firms shows that US effective tax rates would average about 21 percent, or 5 percentage points higher than under current law. But they’d still enjoy tax advantages because they’d also have access to new tax breaks that aim to encourage domestic manufacturing and clean-energy investments. Foreign companies with US operations, meanwhile, would pay higher taxes on their US income.
Two new IRS tools to help claim the advanceable child tax credit. The agency has launched two online tools: The Child Tax Credit Eligibility Assistant helps families answer FAQs to quickly determine whether they qualify for the advance credit. The Child Tax Credit Update Portal allows them to verify their eligibility.
Inflation, polling, and… lumber? A new Harvard CAPS/Harris Poll finds that 85 percent of Americans say that they’re at least somewhat concerned about inflation, including 45 percent who say that they’re “very concerned.” Federal Reserve Chairman Jerome Powell says inflation will eventually slow: “It’ll be like the lumber experience,” he told reporters last week. “Prices that have moved up really quickly because of the shortages… should stop going up. And at some point, they, in some cases, should actually go down. And we did see that in the case of lumber.”
Missouri Governor Mike Parson issues an ultimatum. He promises substantial budget cuts to colleges, schools, and social services if the General Assembly allows a hospital tax to expire. Billions of dollars from the tax fund Medicaid and Missouri would face a budget shortfall of $1.4 billion over two years if it isn’t renewed. State Republicans remain divided over what to do. Parson says the spending cuts would take effect July 1.
Canada advances would tax vacant foreign-owned properties. Canada’s deputy prime minister Chrystia Freeland says that on January 1, 2022, Canada will impose the “first national tax on vacant or underused residential property owned by foreign non-residents.” Properties may currently be empty due to pandemic-driven restrictions on crossing the US-Canada border.
Tomorrow: The 11th Annual IRS/TPC Joint Research Conference on Tax Administration. You can attend virtually. Researchers from the IRS, other government agencies, academia, and private organizations will discuss new work to make tax administration more effective. Register here for the online event that runs from 9:00 am to 4:30 pm.
Or tune in tomorrow at noon to TPC’s Prescription with IMF economist Alpa Shah. She will join TPC’s Howard Gleckman to discuss digital taxes. A coauthor of a recent paper on the topic, she’ll discuss efforts by countries and states to implement such levies, their pros and cons, and how these taxes might be affected by ongoing negotiations over a new international tax regime. Register and learn more here.
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 firstname.lastname@example.org.