About the Fair Tax Law… In a speech tomorrow in Virginia, expect the president biden to hit House Republicans plan to abolish the IRS, as well as all federal taxes, with a national sales tax. While the proposal would kill off the IRS, it would offload collections, administration and enforcement to state tax authorities for a fee. If the tax generates the same amount of revenue as the current tax code, “annual collection fees…for states would approach $10 billion. By comparison, the IRS spent about $13 billion per year over the past decade,” wrote TPC’s John Buhl.
Understand the federal debt limit. Progress in a deeply divided Congress on raising the debt ceiling remains elusive, putting the US at risk of financial crisis or even default. TPC researchers have written extensively about the importance of raising the debt ceiling in a timely manner. Take a look at our collection of work here.
The IRS regulatory authority may face more challenges. Tax Notes reports (paywall) in the growing suspicion of the judiciary over the exercise of administrative power by the executive branch. Should Congress Write Tax Rules Instead of the IRS? Currently, the Chevron The doctrine allows the IRS to interpret a statute that is unclear, but US Supreme Court Justice Neil Gorsuch wants to review that doctrine. And taxpayers have won several recent cases attacking IRS regulations that failed to comply with the Administrative Procedure Act, which specifies how federal rules are written.
IRS: Free File is now open and/or be sure to hire a reputable tax preparer. The agency reminds taxpayers that the free filing platform is already available on the IRS website here. If taxpayers choose to hire a paid preparer, the IRS reminds them to insist that their preparer have a valid tax identification number and sign the tax return. The IRS provides tips for choosing a trusted preparer here.
California state lawmakers still want an estate tax. A coalition of Democratic lawmakers resubmitted a bill to tax California billionaires at a rate of 1.5 percent starting in 2024. Starting in 2026, those worth more than $50 million will face a 1 percent tax. The lien would target “worldwide net worth,” including “realized and unrealized” assets such as stocks, real estate, art and collectibles, farmland and offshore accounts. The tax could raise about $21.6 billion from the top 0.1 percent of California households.
Nevada Governor Lombardo wants to suspend the gas tax. In his State of the State address, the newly elected Republican governor proposed a budget that suspends the tax of 23 cents per gallon for one year. He says the vacation would save a family four “hundred” dollars a year.
For the latest tax news, subscribe to the Tax Policy Center’s Daily Deduction. Sign up here to receive it in your inbox on weekdays at 8:00 am (only on Mondays when Congress is in recess). We welcome suggestions for new research or other news. Email Renu Zaretsky at [email protected].
