New Congress, new tax rules, old obstacles
On the first day of the new Congress, new and old tax laws are being calculated, implemented, and executed. Tax prep firms are ready and waiting to help tax filers while repealing the medical tax device remains on the agenda.
On the first day of the new Congress, new and old tax laws are being calculated, implemented, and executed. Tax prep firms are ready and waiting to help tax filers while repealing the medical tax device remains on the agenda.
The House orders dynamic scoring.聽On the first day of the new Congress, the House, by a largely party line vote,聽instructed聽the Joint Committee on Taxation and the Congressional Budget Office to include macroeconomic effects when it calculates the revenue effects of major tax bills. The rule comes with聽several loopholes聽but Democrats are still fuming. It is unclear how the Senate will address this.聽 聽
The ACA and tax filing season: Tax prep firms are gearing up.聽The Affordable Care Act resulted in 46 changes to the tax code. The聽TPC鈥檚 handy ACA Calculator聽helps filers figure any tax penalty for remaining uninsured. Now that about 7聽million Americans have enrolled聽through health exchanges, they鈥檒l be filing taxes beginning this month, and will likely need help understanding whether they owe a penalty or whether their tax subsidy is correct. Tax prep firms such as聽H&R Block聽and聽Jackson Hewitt, and online vendor聽TurboTax聽are ready and waiting to help. Makes one wonder, again, whether tax prep firms can鈥檛 be an important聽portal to ACA health exchanges, during, say,聽tax filing season.
Repealing the Medical Device Tax: Low-hanging fruit, if a little pricey.聽The Hill聽reports on a GOP聽top priority to repeal the 2.3 percent sales tax on medical equipment聽produced by about 7,000 companies聽nationwide. Last year the tax generated about $2.3 billion. By 2022, it could raise $29 billion and help offset the cost of insuring millions of Americans. A few Republicans oppose repeal鈥攐nly because they want Obamacare to remain 鈥渁s painful as possible鈥� until the entire law can be repealed. But after more than 50 failed votes to repeal the ACA, repealing the tax alone might be the most they can do it. As for that $29 billion in lost revenue? It won鈥檛 likely get much congressional attention.
A tax cut for Oklahoma? Too bad it鈥檚 not affordable.聽TPC鈥檚 Norton聽Francis reviews Oklahoma tax cuts聽that are triggered by a budget gimmick. A rate reduction will go into effect since the聽 state鈥檚 new projection of Fiscal Year 2016 revenue exceeds its 2013 estimate of 2014 revenue. Yes, you read that correctly. Oklahoma compared two revenue forecasts, not actual collections. The new 5 percent rate will require $317 million in spending聽 cuts.聽 And due to聽falling revenues from sagging oil prices, the state聽 may need to make even deeper cuts. Norton concludes 鈥淚t鈥檚 clear that lawmakers wanted the tax cut regardless of the budget implications. They could have at least been transparent about it.鈥�
The Peach State鈥檚 transportation funding: It鈥檚 the pits.聽A聽new report聽from Georgia鈥檚 legislature pegs the state鈥檚聽transportation funding gap聽at between $1 and 1.5 billion. Republicans acknowledge they may need to raise taxes to fill the hole. The report proposes a one-cent statewide sales tax that would generate $1.4 billion a year. It also suggests shuffling existing funds to pay for road repair鈥攂ut a significant gap would remain.
Nine tax stories for 2015: Everything old is new again.聽TPC鈥檚 Howard Gleckman offers the聽by now familiar run-down. There鈥檚 the prospect of business tax reform (dim), and dynamic scoring (will it matter?). Then there鈥檚 the IRS and the Affordable Care Act (complicated and conflict-ridden). International taxes: Better cooperation and enforcement would be nice (if countries agree to adopt changes). Internet taxes 鈥� will states be able to tax internet access or collect sales tax on online purchases? There are state tax cuts to consider (desired, but thwarted by budget realities). There鈥檚 that poor (literally) Highway Trust Fund: Can you picture a GOP-controlled Congress raising the gasoline tax? Or passing a carbon tax? And finally, the story we all love to hate,鈥渢ax extenders:鈥� It will likely remain the walking dead of budget-busting tax breaks, one year at a time.
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