A Vote, A Forecast, And More Scrutiny
The House will vote today on the $1.2 trillion spending package. The six-bill minibus covers the departments of Homeland Security, Defense, Labor, Health and Human Services, Education, and State; the IRS; and general government and foreign operations. The Hill reports that House Majority Leader Steve Scalise (R-LA) expects voting to begin “probably around” 11:30 this morning.
CBO: Tax revenue as a share of the economy will decline over the next 30 years. The Congressional Budget Office (CBO) released its Long-Term Budget Outlook: 2024 to 2054 this week. It estimates that tax revenues will total 18.8 percent of gross domestic product (GDP) in 30 years, a drop from CBO’s estimate last year of 19.1 percent. That decrease is due to a declining share of individual income taxes. But GDP will be $85 trillion in 2054, compared with 2024’s $28.2 trillion, due in part to an estimated growth of the country’s potential labor force.
As for the deficit…The CBO expects the federal budget deficit to climb significantly relative to GDP over the next 30 years, reaching 8.5 percent of GDP in 2054. Federal debt held by the public is estimated to be 166 percent of GDP in 2054, down from last year’s estimate of 181 percent for 2053.
The IRS has issued $135 billion in 43 million tax refunds so far. The IRS reports through the first week of March, the average refund was $3,145. During the same week last year, it was $2,972. The agency has received less than half of the 146 million individual tax returns it expects to receive during the 2023 tax filing season. Tax Day is just over three weeks away.
A bipartisan effort to increase tax scrutiny of big corporate mergers. The Wall Street Journal reports that Sen. Sheldon Whitehouse (D-RI) and Sen. JD Vance (R-OH) are working together to eliminate companies’ ability to complete tax-free mergers. Their bill, introduced yesterday, would make shareholders who receive stock through such deals owe capital-gains taxes immediately; shareholders would no longer be able to defer those taxes until they sell their shares. This would make the tax treatment of stock-for-stock deals similar to that of all-cash deals that trigger shareholder taxes.
High-value trusts under scrutiny in a new bill. Senate Finance Committee Chair Ron Wyden (D-OR) and Sen. Angus King (I-ME) introduced legislation this week that aims to curb tax-avoiding abuses of irrevocable trusts by the wealthy. The Getting Rid of Abusive Trusts (GRATS) Act would require grantor-retained annuity trusts (GRATs) to have a minimum term of 15 years and a maximum term of the annuitant’s life expectancy, plus ten years. Currently, GRAT rules allow grantors to reduce the value of their estate, consequently lowering their estate tax burden while avoiding additional income or gift tax.
In Oklahoma: A bill to create a state tax credit for contributions to certain pregnancy centers. TaxNotes reports (paywall) on an Oklahoma House bill that would create an income tax credit for contributions made to qualified pregnancy resource centers that do not perform or refer for abortions. The credit would equal 70 percent of the amount contributed and apply to tax years 2024 –2028.
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