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Why is Congress giving business retroactive tax breaks? TPC’s Howard Gleckman argues the breaks are a bad idea. The tax breaks would be made available for business decisions made as far back as 2022 as part of the new compromise tax package that may see a vote next week. Drafted by House Ways & Means Committee Chair Jason Smith (R-MO) and Senate Finance Committee Chair Ron Wyden (D-OR), the tax subsidies are supposed to encourage businesses to engage in activities that benefit the overall economy. But paying firms for decisions made years ago “does little more than provide a financial windfall for the shareholders of the firms lucky enough to take advantage of the tax reductions.”
IRS launches “Simple Notice Initiative.” Work is underway to simplify and clarify about 170 million letters sent by the IRS to taxpayers annually. These letters cover a range of issues—from claiming credits and deductions to meeting tax obligations. The notices are often long and difficult to understand, making it hard for taxpayers to understand their next steps. During the last year, the IRS reviewed and redesigned 31 notices in time for this year’s tax season. By next year, the IRS will review and redesign the most common notices received by individual taxpayers.
Vermont state lawmakers hop on the wealth tax bandwagon. State Democratic lawmakers are introducing legislation that would tax capital gains earned by people with more than $10 million in net worth, even if the gains have not yet been realized. Another bill would add a 3 percent marginal tax on individual income exceeding $500,000 a year. Democrats believe the bills will gain support as post-pandemic budgets continue to tighten.
Georgia lawmakers aim to offer tax relief for families. Tax measures introduced this week would increase the child tax credit from $3,000 to $4,000 per child and double the homestead tax exemption. Officials also announced they will use the state’s revenue shortfall reserve to offer an additional $1 billion in individual income tax relief.
While Ohio state lawmakers consider eliminating the state income tax. A group of Republican legislators announced this week a proposal that would gradually phaseout the Ohio individual income tax over six years. The tax currently generates $10 billion in annual revenue and comprises nearly 25 percent of the state’s general revenue. The lawmakers sponsoring the proposal have not yet offered a plan to make up for the lost revenue.
West Virginia lawmakers advance a tax on windmills. The Senate Energy Committee passed a bill this week that would increase the tax on windmills. Windmills are currently taxed as personal property at salvage value, or 5 percent of original cost based on 79 percent of the full value, with the 5 percent depreciating annually. The salvage value formula reflects an effort to equalize the tax on a per-megawatt basis with coal. The Senate bill would tax windmills as real property, raising $6.1 million in additional annual revenue.
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].
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