A Soft Landing, The Debt Limit, And IRS Deadlines
A soft landing? Treasury Secretary Janet Yellen told Reuters that the economy is in “fundamentally good shape” and may be able to handle the pressure of the Federal Reserve’s efforts to reduce inflation. She said she believes a “soft landing” – reducing inflation without prompting a recession – is possible due to a strong labor market and healthy US balance sheets.
Tune in at 2:00 pm today for TPC’s online event on predicting tax credits. For many families, calculating their Earned Income Tax Credit and Child Tax Credit each year can be difficult, as earnings and other eligibility factors change from one year to the next. TPC’s Elaine Maag, Pinar Cebi Wilber of the American Council for Capital Formation, and Joshua McCabe of the Niskanen Center will examine challenges and explore opportunities for a more predictable distribution of the benefits. Intuit’s Derrick Plummer will moderate the discussion. Learn more, register and watch here.
Breaching the federal debt limit could hurt children. If Congress doesn’t raise the debt ceiling in time, it will need to cut spending or increase taxes by $1.5 trillion this year. Lawmakers are unlikely to increase taxes and have pledged not to touch Social Security or Medicare. That means discretionary programs could be on the chopping block. “That’s bad news for children because many important programs for health, education, housing, and community services fall into this category,” TPC’s Elaine Maag warns. Lifting the debt ceiling, Elaine concludes, would allow Congress to alleviate economic stress on families and fulfill its promises to the public.
Whoops: The IRS missed its deadline for completing a plan to spend $80 billion in new money. TPC’s Howard Gleckman unpacks the myriad reasons the IRS failed to meet its internal deadline, set by Treasury Secretary Janet Yellen last August, to develop a plan for its Inflation Reduction Act funding. Howard explains that the agency needs a robust plan to establish the agency’s credibility with Congress and the public. After all, Americans have to meet their tax filing deadlines or face penalties and interest.
Will Italy apply its VAT to Meta’s user registrations? Facebook’s parent company could face a $925 million tax bill if Italian prosecutors determine that free access on Meta platforms – in return for user data – amounts to an exchange of services. If it does, membership registrations would be subject to Europe’s VAT sales tax in Italy.
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