Donor Disclosures, Income Measures, and Tax Prep
ISO: Funds to pay for infrastructure. Democrats and Republicans have been at loggerheads for weeks over how to pay for Biden’s big infrastructure bill, or some version of it. Democrats want to raise corporate taxes. Republicans say they want to raise unspecified user fees. Now a bipartisan group of eight senators is floating some user fee ideas. They include raising and indexing the gas tax, taxing electric vehicles, and diverting unused state and local COVID-19 relief funds. The plan seems unlikely to win support from Biden, 60 senators, or even a majority of the Senate.
House Dems to Treasury and IRS: Reverse limits on donor disclosures for nonprofits. A group of Democratic lawmakers wants Treasury and the IRS to reverse a Trump Administration rule that limits donor disclosure requirements for politically active tax exempt organizations. Senate Democrats made a similar request last month. The House Democrats’ letter to Treasury Secretary Janet Yellen and IRS Commissioner Charles Rettig says “this policy weakens federal tax laws, campaign finance laws, and longstanding efforts to prevent foreign interference in U.S. elections.”
Tax increases may depend on what income means. TPC’s Howard Gleckman writes that the many definitions of income may come into play as Congress debates President Biden’s tax proposals. Biden’s detailed tax plan, due out at the end of this week, may help define how he’d measure income. But there are many ways to do that. “The gulf between, say, economic income and [adjusted gross income] can be an ocean wide, especially when it comes to unrealized capital gains of high-income households… Taxpayers will need to pay close attention.…” Howard briefly describes just some of many possible income measures.
Tune in today at noon for your Prescription. Rebecca Thompson, director of field engagement and the Taxpayer Opportunity Network at the nonprofit Prosperity Now, leads the organization’s volunteer tax preparation initiative for filers with low incomes. She’ll talk with TPC’s Howard Gleckman about the 2021 filing season, and how policymakers can make Tax Day easier. Find out at noon here.
North Carolina Senate Republicans propose a tax cut. This week they released a plan to cut the personal income tax rate from 5.2 percent to 4.9 percent, and raise the tax threshold (or zero bracket amount) from $21,500 to $25,500. The plan also would increase the child tax deduction by $500. Democratic Gov. Roy Cooper proposes a two-part tax cut that includes an earned income tax credit for lower-income workers and a child and dependent care tax credit.
A soda tax in Rhode Island? State legislators have proposed a 1.5-cent-per-ounce tax on sugary beverages including non-diet soda, sports drinks, and fruit drinks with added sugars. Revenue would offset a 50 percent discount on fruits and vegetables purchased by those eligible for Supplemental Nutrition Assistance Program (SNAP, or food stamp). It would be the first statewide soda tax in the country.
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