Lawsuits, A Repeal And More Musings About Gas Tax Holidays

A lawsuit challenging Maryland’s digital ad tax can proceed, court rules. TaxNotes reports (paywall) Maryland county court Judge Alison Asti  denied a state motion to dismiss the case, ruling that companies do not need to exhaust administrative remedies before challenging the constitutionality of a state tax on digital ads. Subsidiaries of Verizon and Comcast argue that the tax violates the Internet Tax Freedom Act.

Recent court case weakens an IRS enforcement tool. The Wall Street Journal examines (paywall) a US appellate court ruling that could allow more taxpayers to challenge the IRS under the Administrative Procedure Act. The court ruled the IRS should have sought public comment before  requiring  taxpayers to report certain tax-advantaged cash-value life insurance transactions. The  ruling applies to Michigan, Ohio, Kentucky, and Tennessee. Congress could supersede the decision by exempting these transactions from government regulatory procedures but The Journal reports there is little interest in doing so.

Manchin sinks one of Biden’s Fed nominees. The West Virginia senator says he will oppose the nomination of Barbara Bloom Raskin, Biden’s pick to be the Federal Reserve’s top banking regulator. Manchin says she “failed to satisfactorily address my concerns about the critical importance of financing an all-of-the-above energy policy.” Manchin is likely to join every Senate Republican in opposing her nomination, effectively killing it. The Senate must still address Biden’s four other Fed appointments and reappointments, including Jay Powell’s renomination as chair. 

Massachusetts gas tax suspension? Republican Gov. Charlie Baker continues to push for suspending its 24-cent-per-gallon gasoline tax. But the Democratic-controlled House rejected a GOP proposal to halt the tax until prices fall below $3.70 a gallon. Baker has proposed $700 million in tax cuts in his state budget. 

An Iowa gas tax holiday hits a pothole. A bipartisan bill raised Iowa’s gas tax in 2015 and the current Republican-led legislature cut Iowans’ income taxes with a new 3.9 percent flat tax.  Now, House Transportation Committee Chair Brian Best says, “we have done all we can to help Iowans with taxes.” Gas tax revenue supports Iowa’s roads and bridges and Best says a gas tax holiday is too much:  “At what point would we quit?”

West Virginia repeals its 71-year-old soda tax. Gov. Jim Justice will soon sign a repeal of the tax that  applies to bottled soft drinks, soft drink syrups, and dry mixtures used to make soft drinks. Since  1951, the tax that currently generates about $14 million a year has funded the construction of a new health sciences center and a hospital at West Virginia University. Now, the university will receive revenue from state insurance taxes. The soda tax will end in July 2024. 

In case you missed it: TPC’s Elaine Maag on the CTC. Writing for CNN Business Perspectives, Elaine argues that reestablishing the 2021 enhanced child tax credit (CTC) could provide significant assistance to families struggling to make ends meet. “We know that bringing back the enhanced CTC would reduce child poverty and provide crucial cash support to low-income households, without much interruption to work as some fear. Add to that the potential for the credit to blunt the harm of high inflation, and reinstating last year’s child tax credit enhancements couldn’t come at a better time.”

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