Tax Credits Help; Tax Cuts Need to Be Paid For
Tax credits are making health care under the Affordable Care Act… affordable. The US Department of Health and Human Services reports that tax subsidies have reduced the cost of the average federal health insurance exchange premium from $346 to $82. About 3.2 million people are paying less than $100 per month and of those, 1.4 million people are paying less than $50 a month.
Tax cuts in DC will only be affordable if revenues beat projections. The District of Columbia’s Chief Financial Officer Jeffrey DeWitt is concerned that the $160 million tax cut package passed by the DC Council in May could throw the District’s budget off balance and exceed the District’s debt cap. One solution: “Planned cuts in income taxes, business franchise taxes and estate taxes will be… dependent on the District’s continued economic growth.”
There’ll be tax cuts and a tax hike in the Ocean State. The Rhode Island Senate passed the fiscal year 2015 state budget approved by the House earlier this week. Democratic Governor Lincoln Chafee is expected to sign the $8.7 billion package. The budget cuts the state’s corporate income tax rate to 7 percent, increases the estate tax threshold to $1.5 million, and creates an infrastructure fund supported by a gasoline tax increase.
Maybe there’ll be a federal gas tax increase, too? Democratic Senator Chris Murphy, and Republican Senator Bob Corker would raise the 18.4 cents per gallon gasoline tax and the 24.4 cents per gallon diesel tax each by 12 cents over the next two years. Their proposed increases would fill the running-on-fumes Highway Trust Fund. The fund has dried up in large part because the taxes have not been raised in 20 years.
Could there be federal tax reform by the end of next summer? Senate Finance Committee Chair Ron Wyden sees a 15-month window to reform the federal tax code. That window opened with the latest and largest corporate inversion effort by Medtronic. Wyden would like to see tax reform by August 2015, before presidential election-campaign politics steal lawmakers’ attention. This assumes such a theft has not already occurred.
The IRS wants more US taxpayers to ‘fess up. The IRS’ voluntary disclosure program for US taxpayers with offshore accounts is now available to more US taxpayers, for the first time including some living on US soil. They need to move quickly: FATCA goes into effect July 1 and foreign banks will be required to disclose their US clients’ accounts.
And the Ways & Means Committee wants to see IRS Commissioner John Koskinen sooner. House Ways and Means Chair Dave Camp moved up the hearing on lost IRS emails, in part to preempt Oversight Committee Chair Darrell Issa, who wanted first crack at Koskinen. What had been scheduled for next week is now set for tomorrow morning. Gotta watch those sharp elbows.
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