A Debt Ceiling Lawsuit And Big Tax Burdens
Is Treasury action after reaching a debt limit unconstitutional? The National Association of Government Employees filed a lawsuit against Treasury Secretary Yellen and President Biden. If Secretary Yellen abides by the debt limit once it becomes binding (as soon as June 1), she would have to choose which federal obligations to pay. But the lawsuit argues that under the Constitution, the president and Treasury secretary have no authority to choose since the Constitution grants spending power to Congress.
Stay tuned for a new tax cut proposal from Wisconsin’s Republican lawmakers. Assembly Speaker Robin Vos says his caucus will likely have a plan to reduce taxes in the next state budget by the end of May. He said he was interested in a flat tax but was not confident other lawmakers would support it.
Are marijuana companies paying too much in federal taxes? Industry research firm Whitney Economics released an analysis that finds marijuana companies overpaid more than $1.8 billion in federal taxes in 2022 and forecast an overpayment of $2.1 billion in 2023. The excess payments, the firm says, are due to Section 280E of the Internal Revenue Code. The section prevents companies considered traffickers of Schedule 1 and Schedule 2 controlled substances from deducting business expenses in the same way as other businesses. As a result, marijuana companies are taxed on gross income, not net income.
After Western sanctions, Russia increased taxes on its oil and gas firms. Nearly half of Russia’s budget relies on tax revenue from the oil and gas industry. Sanctions imposed after Russia’s invasion of Ukraine have affected those tax receipts, prompting Russia to change the starting point for its tax rate on the Brent crude international benchmark instead of the price of Urals, a cheaper Russian crude. Russia gained about $8 billion in revenue as a result, but the move is “definitely destructive to their industry,” an official told the Financial Times.
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