An IRS Budget Cut And Bankruptcy Claim
House Republicans propose a $2.2 billion cut to next year’s IRS budget. The House Appropriation’s Subcommittee on Financial Services and General Government will vote today on legislation that would reduce the IRS budget for fiscal year 2025 from $12.3 billion to $10.12 billion. Much of the cuts would be to enforcement activities. House Appropriations Chair David Joyce (R-OH) introduced the legislation. The Biden administration requested that Congress maintain current IRS annual funding levels.
The IRS will receive a $200 million priority claim in the FTX bankruptcy. Bloomberg Law reports (paywall) FTX settled the IRS $24 billion claim for $200 million, to be paid within 60 days of the effective date of the company’s proposed restructuring plan. The IRS will also receive a $685 million lower priority claim payable after customers and creditors are paid, to the extent funds are available.
Hawaii will now be one of the lowest-taxed states. Democratic Gov. Josh Green signed a five-year $5 billion tax cut this week. It equates to a 70 percent reduction in state income taxes for many families in Hawaii. The new law increases the standard deduction and widens tax brackets. For a family of four with a median household income of $88,000, take-home pay will rise by more than $3,600 by 2031, according to a press release from the governor’s office. The changes start go into effect starting in January.
Two more tax bills down and out in California. Tax Notes reports (paywall) on a failed bill that would have prevented local governments from offering sales tax revenue sharing deals to online retailers. The proposal stalled on the Senate floor. And legislation for a digital ad tax to fund local journalism has also not advanced, meeting the same fate of a different digital ad tax bill (that would have funded mental health services) last month.
Brazil moves to offset the cost of its payroll tax break. The Brazilian government will issue a provisional measure limiting tax credit compensation to companies. The move aims to cover the cost of a payroll tax exemption for municipalities and 17 economic sectors. The exemption will cost 26.3 billion reais ($5 billion) this year. The provisional measure frees 29.2 billion reais ($5.5 billion).
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