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Sorry, States: GOP Senate Ignores Need for Federal Relief to State and Local Governments
July 31, 2020 • By Meg Wiehe
During the Great Recession, the most ambitious state revenue-raising efforts closed just 10 percent of shortfalls and most states relied heavily on federal aid and budget cuts to balance their budgets. Of course, states can and should turn to progressive revenue-raising options now, but as the pandemic rages on, the extent of this crisis will become too significant for states and localities to handle on their own. The federal government should step in to help.
As many of the country’s major professional sports leagues attempt to return to action amid concerns that the pandemic will find a way to ruin even the best-laid plans, state legislatures find themselves in a similar boat. Lawmakers would normally be enjoying their summer breaks at this time of year, but instead are returning to work in special sessions surrounded by plexiglass and uncertainty. Read on for information on ongoing sessions in states including California, Massachusetts, and Nebraska, as well as upcoming sessions in Missouri and Oregon.
Biden’s Minimum Corporate Tax Proposal: Yes, Please Limit Amazon’s Tax Breaks
July 29, 2020 • By ITEP Staff, Matthew Gardner, Steve Wamhoff
A large majority of Americans want corporations to pay more taxes and Democratic presidential candidate Joe Biden has several proposals to achieve that. The newest idea is to require corporations to pay a minimum tax equal to 15 percent of profits they report to shareholders and to the public if this is less than what they pay under regular corporate tax rules. A recent article in the Wall Street Journal quotes several critics of the proposal, but none of their points are convincing.
A Cautionary Tale on Sales Tax Holidays During a Pandemic
July 29, 2020 • By Dylan Grundman O'Neill
Sixteen U.S. states will hold “sales tax holidays” this year. As ITEP’s newly updated brief explains, these events offer dubious benefits at significant public expense even in normal years, problems which are only amplified in the context of the COVID-19 pandemic.
Americans are demanding policy that meets the needs of this urgent moment. There are now competing proposals from the U.S. House and Senate: One is a reasonable response to the staggering crisis we’re in. One is not.
A Tax Loophole You Could Drive a Food Truck Through: Senate GOP Proposes Full Deductibility of Business Meals
July 28, 2020 • By Matthew Gardner
After weeks of being in no particular hurry to assemble a new COVID-19 economic relief package, the Senate GOP has released its plan. It includes the “Supporting America’s Restaurant Workers Act,” which would allow business owners to write off 100 percent of the cost of their restaurant meals through the end of 2020. The two most obvious questions to ask about such a plan are “why” and “why now?” Republican lawmakers have not offered sensible responses to either because they have none.
Treasury Secretary Mnuchin to Unemployed Workers: Don’t Worry, Get a Bank Loan
July 24, 2020 • By Jenice Robinson
In an explanation that can only be called richsplaining, Treasury Secretary Steve Mnuchin on Thursday suggested that Congress’s delay in approving expanded unemployment benefits was no problem because banks would extend loans to people in the meantime.
Temperatures and tensions are high right now across the country as Congress debates its next pandemic response and states continue to sweat through difficult decisions. Nevada lawmakers, for example, just wrapped up a special session during which they came within one vote of a proposed tax increase but ultimately chose to balance their shortfall through only funding cuts. But advocates in many states, including California, New Jersey, New York, and Rhode Island are trying to light a fire under lawmakers to encourage them to enact progressive tax increases on their wealthiest households.
Biden Proposes to Fund Child Care and Elder Care by Shutting Down Tax Breaks for Real Estate Investors
July 21, 2020 • By Steve Wamhoff
On Tuesday, Democratic presidential candidate Joe Biden announced a $775 billion proposal to expand care options for children and elderly people, suggesting that the cost would be at least partly offset by paring back tax breaks for real estate investors. Bigtime real estate investors are simply unaccustomed to operating without government subsidies provided through the tax code.
While the White House hasn’t clarified what it is proposing, we know that a payroll tax cut would not be well-targeted. In a new report, ITEP estimates the effects of suspending Social Security and Medicare payroll taxes for employees and employers from September 1 through the end of the year. We find that 64 percent of the benefits would go to the richest 20 percent of Americans while 24 percent of the benefits would go to the richest 1 percent.
SALT Cap Repeal Has No Place in COVID-19 Legislation: National and State-by-State Data
July 17, 2020 • By Steve Wamhoff
The Trump-GOP tax law enacted at the end of 2017 includes a $10,000 cap on the amount of state and local taxes (SALT) that people can deduct on their federal tax returns, and this is one of the few limits the law places on tax breaks for high-income people. Unfortunately, it is also the provision that some Democrats are most determined to remove.
With tax day finally coming at the federal level and in many states this week, policymakers in Nevada and New Jersey began to talk about revenue solutions to their revenue shortfalls, even if they fell well short of wholeheartedly backing needed reforms. Like their counterparts in most states, they remain primarily focused on temporary solutions to their short-term emergencies. Still, advocates in these and other states continue to push for more fundamental fixes to their inadequate and upside-down tax codes, including a new campaign for better tax policy in Massachusetts and efforts to rein in tax subsidies and loopholes in…
New Prosperity Now Report Identifies Upside-Down Tax Incentives
July 15, 2020 • By Jessica Schieder
Ahead of this year’s delayed Tax Day, our partners at Prosperity Now released a powerful report providing a comprehensive overview of many of the ways our federal tax system privileges wealth over work, while also lifting up several provisions which could serve as a template for improving progressivity within the tax code. The report makes […]
Adequately Funding the IRS Would Be One Small Step Toward Racial Equity in the Tax Code
July 10, 2020 • By Jenice Robinson
IRS Commissioner Charles Rettig vowed to work with Congress to explore how the federal tax system contributes to the racial wealth gap. There are at least two ways this can happen: tax policies enacted by Congress and IRS enforcement of these policies.
Congressional Budget Office Confirms That IRS Budget Cuts Lose Money and Benefit the Rich
July 9, 2020 • By Steve Wamhoff
Lawmakers often claim that they are “saving” taxpayers money by slashing federal spending, but the truth is that these cuts often are counterproductive and costly in the long-term. One type of budget-cutting has costs that are immediate and obvious—cuts to the IRS, the agency that collects the revenue that pays for federal spending. A new report from the Congressional Budget Office (CBO) confirms that lawmakers’ anti-government, IRS funding-cuts zeal has increased the deficit.
State Rundown 7/8: Many State Legislatures Reconvene for Special or Resumed Sessions
July 8, 2020 • By ITEP Staff
Local leaders in the District of Columbia and Seattle, Washington, approved progressive tax changes to raise needed funding this week for priorities such as coronavirus relief, affordable housing, and mental health. Arizona advocates submitted signatures to place a high-income surcharge on the ballot for November. And as a number of states made decisions on how to use federal Coronavirus Aid, Relief, and Economic Security (CARES) Act funds, North Carolina decoupled from costly business tax cuts contained in the act and Nebraska started discussing doing the same.
As ITEP analyst Kamolika Das wrote today, July 1 is typically the beginning of state fiscal years and “a point when one can take a step back and reflect on the wins and disappointments of the past state legislative sessions.” Not so in 2020, she writes, as uncertainty surrounding the virus, state revenues, and potential federal action give state lawmakers no such time to relax and reflect. Although most recent state actions, such as those covered below in California, Mississippi, and West Virginia, have focused on funding cuts and temporary measures to bring budgets into short-term balance, the need for…
New Fiscal Year Brings New Challenges and Opportunities in the States
July 1, 2020 • By Kamolika Das
July 1—the start of the new fiscal year in most states—typically marks a point when one can take a step back and reflect on the wins and disappointments of the past state legislative sessions. 2020 is markedly different. Nationwide business closures and stay-at-home orders in response to COVID-19 have led to unprecedented spikes in unemployment, decreased demand for consumer spending, and increased demand for vital public services. As a result, states face incredibly uncertain financial futures with little clarity regarding how their tax collections will fare over the next year.
State Rundown 6/26: States Take Varying Fiscal Approaches While Awaiting Federal Action
June 26, 2020 • By ITEP Staff
State policymakers this week took a variety of approaches to their fiscal situations amid the COVID-19 pandemic. Tennessee lawmakers chose to balance their budget through $1.5 billion in cuts to public services, but not before adding to those cuts by going forward with planned tax cuts. California legislators also passed a budget but relied on a number of temporary measures and delays to do so. Their counterparts in Massachusetts, New Jersey, and Rhode Island opted for interim budgets to tide them over for a few months while they continue to look for lasting solutions. Meanwhile, many states are debating whether…
Beyond SCOTUS: States Recognize Need for More Inclusive Immigrant Policy
June 26, 2020 • By Marco Guzman
The U.S. Supreme Court last week halted an effort by the Trump administration that would have stripped DACA (Deferred Action for Childhood Arrivals) recipients of their lawful status in the country. The 5-4 ruling is a significant victory for immigrant rights advocates and over 643,000 Dreamers—as they’re known—who were brought here as children and have […]
McSally “Travel Tax Credit” Is an Invitation for Tax Avoidance
June 23, 2020 • By Matthew Gardner
Earlier this week, U.S. Sen. Martha McSally (R-AZ) introduced the “American TRIP Act,” a bill ostensibly designed to encourage Americans to boost the economy by traveling within the United States. The bill is certainly a trip in the colloquial sense of the word.
The Institute on Taxation and Economic Policy stands with activists who are guiding the movement to transform America, dismantle systemic racism in policing, and envision a better justice system. Committed protestors in big cities, small towns, and suburban enclaves have spurred a sea change in public opinion and policy possibility on policing and incarceration. Their work and activism builds on years of action by Black Lives Matter and other leaders.
State Rundown 6/18: States Work to “Finalize” Budgets in Uncertain Times
June 18, 2020 • By ITEP Staff
Despite uncertainty all around the nation, a few states passed budgets this week and many more are negotiating to enact theirs before fiscal years close at the end of June. Colorado notably pared back some of its own tax breaks and limited the potential damage on its budget from new federal breaks. California also passed a budget but few in the state actually think the dealing is done. Iowa quietly enacted its budget too, though advocates in the state are making noise about non-fiscal bills that were added late in the game.
National and State-by-State Estimates of House-Passed Improvements in Tax Credits for Workers and Children
June 18, 2020 • By Steve Wamhoff
Among other important provisions, the HEROES Act includes reforms to the Earned Income Tax Credit (EITC) and Child Tax Credit (CTC) to make these tax credits more effective in helping working people and helping parents afford the costs of raising children.
Tax Justice and Racial Justice: Transformative Change Is Overdue
June 16, 2020 • By Amy Hanauer, ITEP Staff
Progressive tax policy can spur deep investments in communities, help families afford childcare and college, provide healthcare for everyone, re-imagine energy consumption to stop heating the planet, expand parks and bike lanes and public transit. Economic justice can give workers a greater voice than corporations in our democracy. People are protesting because the moment for transformative change in policing and our economy is long overdue.
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