Another Funding Deadline, Scoring The CTC Proposal
Congress sends temporary funding patch to President Biden. The Senate and House moved quickly yesterday to pass the bill. The next funding expiration deadline is March 1.
House Ways & Means markup Tax Relief for American Families and Workers Act of 2024 today. The panel will begin its review of the legislation this morning at 9:00 am. The Joint Committee on Taxation released its estimate of the legislation’s effects on revenue yesterday.
Benefits from the bipartisan CTC proposal would mostly go to lower-income households. Speaking of that House markup session, TPC is out with new model estimates on the child tax credit portion of the plan. Among households with children, about 95 percent of the benefits of the CTC expansion would go to the bottom two income quintiles (those making up to $40,500 annually). The current CTC offers a tax break of up to $2,000 per child, with as much as $1,600 available as a refund. The credit phases in with each dollar a taxpayer earns above $2,500 annually. The new proposal would phase in the credit faster for families with more than one eligible child and raise the amount of the credit available as a tax refund. TPC’s Elaine Maag discussed those policy changes last November (see Options 2 and 3).
TIGTA has a report coming next month on conflict-of-interest violations by Treasury staff. TaxNotes reports (paywall) that an audit of potential violations by department personnel, conducted by the Treasury Office of Inspector General (TIGTA), will be released in late February. The TIGTA report was scheduled for release last fall but was delayed. In April 2022, three Democratic lawmakers asked for an investigation of a possible “revolving door” of employment for tax professionals and the IRS. The inspector general’s report will cover the Treasury Department as a whole, including the IRS.
Safeguarding Charity Act would clarify definition of tax-exempt groups. The legislation, introduced by Sen. Marco Rubio (R-FL) and Rep. W. Gregory Steube (R-FL), would specify that tax-exempt groups are not counted as recipients of federal financial assistance. The bill aims to protect houses of worship, charities, religious schools and other tax-exempt groups from federal regulation and litigation.
Kansas Gov. Laura Kelly vetoes a flat tax. The Republican-led legislature passed a three-year, $1.6 billion tax reform bill that would move the state to a flat 5.25 income tax rate. However, the state Senate does not have enough votes to override the Democratic governor’s veto. The Kansas Department of Revenue estimates that a single rate will direct the largest amount of savings to people with annual incomes exceeding $250,000.
Will he be back? Former Republican governor of California and star of the Terminator movie franchise Arnold Schwarzenegger was detained for three hours at the Munich airport in Germany for suspicion of tax evasion. Officials alleged that he failed to declare a luxury watch that he planned to auction for charity. European Union rules dictate that any traveler arriving with “cash or certain valuable items” worth more than €10,000 must declare the items. Schwarzenegger agreed to prepay any taxes on the watch, but couldn’t find a working credit card machine. Officers escorted him to an airport ATM but its withdrawal limit was too low. Ultimately a second credit card machine worked and the Terminator paid his taxes.
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