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Action Or Inaction, Taxes May Have Only One Way to Go


“Raise ‘em now, we’ll cut ‘em later when we’re back in power.” That’s the message from congressional Republicans to their Democratic colleagues. NBC News  looks at the positioning. Republicans already are attacking Democrats in swing districts for wanting to raise taxes and for backing new funding for IRS enforcement (even though many Republicans support new IRS funding as well. Democrats are focused on who would pay higher taxes: corporations and high income households. Democratic progressives increasingly are saying the GOP is negotiating an infrastructure bill in bad faith and urging Biden to move on. 

Where is public opinion? Republicans, who say they want to raise unspecified “user fees” to pay for infrastructure, may have a tougher sell than Democrats, who prefer raising corporate taxes. TPC’s Howard Gleckman looks at public opinion on gas taxes, tolls, and corporate tax hikes as a means to pay for infrastructure. As many of two-thirds of those surveyed like those corporate tax hikes, as long as the revenue is targeted to infrastructure. Tolls rank second and gas taxes last, but opinion on those last two seems moveable.   

Still digging though those 2019 tax returns. IRS Commissioner Charles Rettig says the agency still is giving an initial review to 335,000 tax returns from 2019, and it has flagged 6 million more for manual review by a human. The agency fell far behind during the pandemic and has struggled to catch up.

House Republicans want to test a VMT. As expected, House Republicans proposed their own infrastructure bill that would spend $400 billion over five years, mostly on roads and bridges. It included no specific pay-fors, but contained one surprise: a national pilot of a vehicle per miles traveled tax that might someday replace the gas tax.      

Arizona budget deal includes a big income tax cut. Republican state lawmakers have struck a deal with GOP Governor Doug Ducey. The budget includes a flat 2.5 percent income tax, which would cut $1.5 billion from annual state revenue, and cuts to commercial property tax rates. The state legislature’s budget analysts estimate that the fiscal year ending June 30 is running nearly $700 million above projections. They estimate fiscal year 2022 revenues will be nearly $1 billion above forecasts.

A plan for a unified tax regime in the European Union. This week the EU Commission adopted a plan to require certain large companies operating in the EU to publish their effective tax rates. The EU wants greater transparency and would introduce new tax avoidance measures to curb abusive use of shell companies. The plan also tries  to address the current debt-equity bias in corporate taxation by encouraging more financing with equity. 

A border-adjustable carbon tax? US climate envoy John Kerry said this week that the US may support a fee on imports from countries that do not tax heavy polluters, but expressed caution. The European Union plans to advance a “carbon border adjustment mechanism” that would push trading partners to do more to cut carbon emissions. Kerry told reporters, “We want to make sure that it’s not going to have a… negative impact…  Nobody wants their businesses disadvantaged” by introducing carbon taxes that businesses elsewhere don’t pay.

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 dailydeduction@taxpolicycenter.org.



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