Some Details on IRS Budget Plans Emerge
Early plans for the IRS funding infusion. We’re still waiting on a detailed plan for how the IRS intends to use its $80 billion funding tranche from the Inflation Reduction Act (IRA). However, Tax Notes (paywall) lays out short-term plans for some of the funding and how it intertwines with Treasury’s budget request for fiscal year 2024. In addition to boosting its hiring, the agency thinks it will need an additional $105 million to implement the IRA’s clean energy tax credits. Also, audits of large corporations might decline next year, as the IRS onboards and trains new staff.
A bad time for the scheduled TCJA phaseouts? Much of the attention around the Tax Cuts and Jobs Act (TCJA) is on the individual income tax provisions, which expire after 2025. But starting this year, bonus depreciation for capital investments also starts to wind down. In a new Tax Notes analysis, Martin Sullivan argues that recent bank failures and other economic uncertainty make now a good time to keep bonus depreciation in place. “For taxable businesses, bonus depreciation is the equivalent of an interest-free loan from the government,” Sullivan writes. “By not acting now to postpone or eliminate the phaseout, Congress is eliminating this loan program precisely when it is most needed.”
Washington’s capital gains tax was deemed to be an “excise” tax by the state’s high court. What is income, anyway? Well, the Washington state Supreme Court decided that its constitution – which prior rulings have determined prohibits an income tax – can accommodate a capital gains tax by classifying it as an excise tax, rather than an income or property tax.
Utah Governor approves a $400 million tax cut package. Gov. Spencer Cox (R) last week signed into law a reduction in the state’s income tax rate (from 4.85 percent to 4.65 percent). The new law expands the tax credit for Social Security income and increases the state’s earned income tax credit. The plan would also remove the sales tax on groceries if voters approve a constitutional amendment on how income tax revenues can be allocated.
South Carolina makes available $1.3 billion in incentives for a Volkswagen manufacturing expansion. Approved last week by Gov. Henry McMaster (R), the incentive package will support Volkswagen’s off-road brand Scout Motors to produce electric pickup trucks and sport-utility vehicles in the state.
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