An Enhanced Tax Model, More Tax Cuts, And Havens
TPC examines data to tackle racial inequities in the US tax code. The Internal Revenue Code can widen racial income and wealth inequalities because of long-standing disparities in housing, education, and employment. TPC researchers share how its tax model can include distributional effects of tax policies by race and ethnicity. In a new paper, they share preliminary results: Across all income categories, itemized deductions disproportionately benefit White taxpayers over Black and Hispanic taxpayers.
Tune in Thursday for TPC’s Prescription. This week’s webcast features Erica York, senior economist with the Tax Foundation. She’ll discuss the Fair Tax Act, which would replace most federal taxes with a national sales tax. While most experts think the plan is unworkable, in the future another kind of federal consumption tax could work. Register and tune in here.
Wisconsin Gov. Evers proposes a $1.2 billion tax cut. He announced new details of his plan this week, which features a 10 percent state income tax cut. In addition, the nonrefundable Family and Individual Reinvestment Credit would be available to individuals earning less than $100,000 and married couples filing jointly earning less than $150,000. The credit would cost $839.6 million over two years, affecting 1.9 million filers. Wisconsin’s budget surplus currently exceeds $7 billion.
Which tax cut will South Dakota lawmakers embrace? The state’s House Appropriations Committee will explore a number of tax cut bills over the next few weeks. One would repeal the 4.5 percent sales tax on food—an effort supported by Republican Gov. Kristi Noem—at a cost of $120 million in annual tax revenue. The priciest bill would reduce the state sales and use tax by half a percentage point on all currently taxed items, reducing tax revenue by $168 million. If lawmakers don’t pass any tax cut bills, the 2024 ballot might include a constitutional amendment to eliminate the sales tax on food.
EU plans to add Russia and three other countries to its list of tax havens. Reuters reports that European Union finance ministers plan to add Russia, Costa Rica, British Virgin Islands and Marshall Islands to its list of tax havens today. The EU established the list in 2017 after widespread tax evasion and avoidance schemes were uncovered in 16 countries. Countries on the list face higher scrutiny in their financial transactions and risk losing access to EU funds.
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 [email protected].