Funding Tax Breaks, the IRS, and Public Pensions, Safety, and Schools
Six business tax breaks move ahead. The House Ways and Means Committee has approved by a largely party-line vote $310 billion in business tax breaks, overcoming a partisan dispute over how and whether to offset their cost. The measure would permanently restore some of the 50+ provisions that expired last December, including the research & experimentation credit, full first-year depreciation for small business purchases of equipment, and special tax breaks for multinational corporations. The Senate Finance Committee has voted to extend these and other tax preferences only through 2015. It will probably not get sorted out until after the November elections.
Today on the Hill: The Senate Appropriations Subcommittee on Financial Services and General Government holds a hearing this afternoon on President Obama’s 2015 funding request for the Treasury and the IRS. Treasury Secretary Jack Lew, IRS Commissioner John Koskinen, and Treasury Inspector General for Tax Administration J. Russell George are scheduled to appear. Headline-grabbing speeches will ensue.
Public pension grading tool launches tomorrow at the Urban Institute. A new interactive report card grades plans on retirement income for public employees, incentives to attract and retain workers, and funds set aside to cover promised benefits. Learn what it takes to earn an “A,” and who is getting an “F.” Register here for a noontime discussion on the issue featuring Mayor Stephanie Miner of Syracuse, New York, Dan Doonan of AFSCME, and Urban Institute colleagues Richard Johnson and Kim Rueben. Donald Marron of the Urban Institute will moderate.
Public safety: You get what you can pay for. In response to the third straight year of rising homicides, the Indianapolis City-County Council recommends a $29 million tax hike to increase the Indianapolis police force by 300 officers. Out west in Oregon, counties are working to strengthen rural policing, which has been weakened by declining federal payments for lost timber tax revenues. Things could be, and are, worse: With no time to wait for the severely under-funded Detroit police to arrive, some residents are defending themselves while the police department awaits $36.2 million from a $120 million Barclays loan.
What will be the fate of school property taxes in the Keystone State? As a Pennsylvania widow stands to lose her home over $6.30 in interest due on her late payment of school taxes, a school property tax elimination plan will be reviewed by the state’s Senate Finance Committee today. Instead of taxing property to fund schools, it would increase the state’s personal income tax to 4.34 percent from 3.07 percent. It also would raise the state sales tax by 1 percent, to 7 percent, and broaden the base to include more items but not food staples.
Will Congress respond to small online retailers in time for the holidays? The Hill reports that online retailer eBay is bringing 45 small-business owners from across the country to argue against proposals to broaden the authority of states to collect sales taxes from online retailers. They’re not fans of the Marketplace Fairness Act, arguing it would add too much complexity to the tax code and pose an undue burden on small businesses. Many other Main Street and online sellers, including Amazon, support the measure, which the Senate passed last year. The House response so far has been perhaps less than constructive. Meanwhile, new research suggests that consumers would rather buy from an online seller that does not collect sales taxes than from one that does.
Bitcoin on Campus, Big Tax Bill with Tuition? This fall, undergraduates at the Massachusetts Institute of Technology each will be offered $100 in Bitcoin, potentially transforming the MIT campus into the largest Bitcoin marketplace on the planet. MIT alumni are the main backers of the experiment, including a co-founder of a high frequency trading company. That seems handy, given the tax treatment of Bitcoin.
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