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A Spending Deal And More Gas Tax Holidays


Senate passes the funding deal. The Senate passed the $1.5 trillion spending package, avoiding a government shutdown. Included in the bill: A 6 percent budget increase for the IRS. Taxpayer services would receive $225 million, up 9 percent from last year. Congress left a wide range of tax policy changes out of the bill.

Trying again with pandemic funding. The House dropped the $15.6 billion initiative from its version of the omnibus appropriations bill after some lawmakers objected to tapping unused federal aid to state and local governments as a funding course. Now, House leaders will try to pass a stand-alone version, funded at least in part from other sources. 

Rettig will testify to Ways & Means on March 17. In what is likely to be a highly contentious hearing, IRS Commissioner Charles Rettig will talk about the current filing season as well as prior year backlogs, and probably make another pitch for more funding. 

Florida lawmakers add a one-month state gas tax suspension to other tax cuts. Last November, Republican Gov. Ron DeSantis called for a five-month gas tax holiday. Instead, the legislature this week added a one-month holiday to an income tax cut package.. The holiday from the 26 cent per gallon levy would occur in October, when few tourists visit the state and one month before voters decide whether to re-elect DeSantis.

Pennsylvania lawmakers pushing their own gas tax cut. Republican Senate President Pro Tempore Jake Corman agrees with Democratic Gov. Tom Wolf that the federal government should suspend its gas tax, but he also wants Pennsylvania to reduce its 59-cent version by one-third. Corman would offset the lost revenue with $500 million in federal pandemic relief funds and $650 million in borrowing from the transportation department for road projects. Another House lawmaker wants to suspend the entire 59-cent tax, one of the highest in the nation.

Other states want gas tax holidays, too. Or not… Among them are Tennessee and Georgia. Meanwhile, in South Carolina, the gas tax is set to climb in July from 26 to 28 cents per gallon. And Washington State’s 49-cent-per gallon levy will stay in place after Republican lawmakers failed in their final attempt to suspend the levy.

California bill would tax house-flippers. Last week a Democratic lawmaker introduced Assembly Bill 1771 to levy a 25 percent tax on profits from homes resold within three years of purchase. After the third year, the tax would gradually decline until it zeroes out in year seven. Revenues would go to cities, schools, and affordable housing.

Subscribe to the Tax Policy Center’s Daily Deduction for the latest tax news. 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 dailydeduction@taxpolicycenter.org.



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