Subscribe

New Congress, new tax rules, old obstacles

 On the first day of the new Congress, new and old tax laws are being calculated, implemented, and executed. Tax prep firms are ready and waiting to help tax filers while repealing the medical tax device remains on the agenda. 

  • close
    House Speaker John Boehner of Ohio administers a ceremonial re-enactment of the oath-of-office to Rep. Tom Reed, D-N.Y., accompanied by his wife Jean Reed and other family members, Tuesday, Jan. 6, 2015, on Capitol Hill in Washington.
    AP Photo/Cliff Owen/File
    View Caption
  • About video ads
    View Caption
of

The House orders dynamic scoring. On the first day of the new Congress, the House, by a largely party line vote, instructed the Joint Committee on Taxation and the Congressional Budget Office to include macroeconomic effects when it calculates the revenue effects of major tax bills. The rule comes with several loopholes but Democrats are still fuming. It is unclear how the Senate will address this.   

The ACA and tax filing season: Tax prep firms are gearing up. The Affordable Care Act resulted in 46 changes to the tax code. The TPC’s handy ACA Calculator helps filers figure any tax penalty for remaining uninsured. Now that about 7 million Americans have enrolled through health exchanges, they’ll be filing taxes beginning this month, and will likely need help understanding whether they owe a penalty or whether their tax subsidy is correct. Tax prep firms such as H&R Block and Jackson Hewitt, and online vendor TurboTax are ready and waiting to help. Makes one wonder, again, whether tax prep firms can’t be an important portal to ACA health exchanges, during, say, tax filing season.

Repealing the Medical Device Tax: Low-hanging fruit, if a little pricey. The Hill reports on a GOP top priority to repeal the 2.3 percent sales tax on medical equipment produced by about 7,000 companies nationwide. Last year the tax generated about $2.3 billion. By 2022, it could raise $29 billion and help offset the cost of insuring millions of Americans. A few Republicans oppose repeal—only because they want Obamacare to remain “as painful as possible” until the entire law can be repealed. But after more than 50 failed votes to repeal the ACA, repealing the tax alone might be the most they can do it. As for that $29 billion in lost revenue? It won’t likely get much congressional attention.

Recommended: Taxes in 2014: 7 new rules and 9 wacky deductions

A tax cut for Oklahoma? Too bad it’s not affordable. TPC’s Norton Francis reviews Oklahoma tax cuts that are triggered by a budget gimmick. A rate reduction will go into effect since the  state’s new projection of Fiscal Year 2016 revenue exceeds its 2013 estimate of 2014 revenue. Yes, you read that correctly. Oklahoma compared two revenue forecasts, not actual collections. The new 5 percent rate will require $317 million in spending  cuts.  And due to falling revenues from sagging oil prices, the state  may need to make even deeper cuts. Norton concludes “It’s clear that lawmakers wanted the tax cut regardless of the budget implications. They could have at least been transparent about it.”

The Peach State’s transportation funding: It’s the pits. A new report from Georgia’s legislature pegs the state’s transportation funding gap at between $1 and 1.5 billion. Republicans acknowledge they may need to raise taxes to fill the hole. The report proposes a one-cent statewide sales tax that would generate $1.4 billion a year. It also suggests shuffling existing funds to pay for road repair—but a significant gap would remain.

Nine tax stories for 2015: Everything old is new again. TPC’s Howard Gleckman offers the by now familiar run-down. There’s the prospect of business tax reform (dim), and dynamic scoring (will it matter?). Then there’s the IRS and the Affordable Care Act (complicated and conflict-ridden). International taxes: Better cooperation and enforcement would be nice (if countries agree to adopt changes). Internet taxes — will states be able to tax internet access or collect sales tax on online purchases? There are state tax cuts to consider (desired, but thwarted by budget realities). There’s that poor (literally) Highway Trust Fund: Can you picture a GOP-controlled Congress raising the gasoline tax? Or passing a carbon tax? And finally, the story we all love to hate,“tax extenders:” It will likely remain the walking dead of budget-busting tax breaks, one year at a time.

Interested in subscribing to The Daily Deduction, the Urban-Brookings Tax Policy Centersummary of the day’s tax news? Sign-up here for free access. If you’d like to tell us about a new research paper or have any comments about our new feature, write us at dailydeduction@taxpolicycenter.org.

The post New Congress, New Rules, Old Obstacles appeared first on TaxVox.

The Christian Science Monitor has assembled a diverse group of the best economy-related bloggers out there. Our guest bloggers are not employed or directed by the Monitor and the views expressed are the bloggers' own, as is responsibility for the content of their blogs. To contact us about a blogger, click here. To add or view a comment on a guest blog, please go to the blogger's own site by clicking on taxvox.taxpolicycenter.org.

About these ads
Sponsored Content by LockerDome
 
 
Make a Difference
Inspired? Here are some ways to make a difference on this issue.
FREE Newsletters
Get the Monitor stories you care about delivered to your inbox.
 

We want to hear, did we miss an angle we should have covered? Should we come back to this topic? Or just give us a rating for this story. We want to hear from you.

Loading...

Loading...

Loading...

Save for later

Save
Cancel

Saved ( of items)

This item has been saved to read later from any device.
Access saved items through your user name at the top of the page.

View Saved Items

OK

Failed to save

You reached the limit of 20 saved items.
Please visit following link to manage you saved items.

View Saved Items

OK

Failed to save

You have already saved this item.

View Saved Items

OK