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Tax deductions for mortgage interest and charitable giving aren’t in trouble as part of tax overhaul legislation, House Majority Leader Kevin McCarthy (R-Calif.) said.
The “home deduction will stay, charity deduction will stay,” he said at an event hosted by the Hoover Institution.
House Republicans in June released a tax overhaul plan that indicated the two tax benefits would remain in place. But housing and charitable sector advocates have voiced concern that the deductions could get capped in tax revamp legislation.
Large tax cuts and undoing the Affordable Care Act could increase U.S. debt, said Treasury Secretary Jacob J. Lew.
Economic growth during President Barack Obama’s tenure has helped narrow annual deficits, Lew wrote in a preface to the department’s annual Financial Report of the U.S. Government. The health care law and budget agreements with Congress have also played parts in creating space to address long-term fiscal challenges facing the U.S., he said.
Lew warned that “near term policies that reduce revenues or increase spending, such as through changes to our tax code or the Affordable Care Act, could increase the size of the fiscal gap and force more dramatic adjustments in later years.”
The highest-income U.S. households would benefit most from cutting taxes tied to repealing the Affordable Care Act, according to a report released by the Center on Budget and Policy Priorities.
The reason largely relates to eliminating two Medicare taxes—the 0.9 percent additional hospital insurance tax and the 3.8 percent Medicare tax on unearned income.
“The top 400 highest-income taxpayers—whose annual incomes average more than $300 million apiece—each would receive an average annual tax cut of about $7 million, we estimate from Internal Revenue Service (IRS) data,” the report said, adding that 7 million low- and moderate-income families would see their taxes rise due to the loss of their premium tax credits.
Retailers, oil refiners and others worried that the House GOP border adjustment tax plan will raise prices for consumers need to take a closer look at the proposal, Harvard University economics professor Martin Feldstein said.
“Any economist who has analyzed this in detail concludes that the net effect is going to be a stronger dollar and therefore no net change to the prices for American buyers and sellers,” Feldstein said in a Jan. 12 Bloomberg Television interview. He chaired the Council of Economic Advisers under President Ronald Reagan.
Proponents of the border adjustment plan, which taxes imports and exempts exports, say the U.S. dollar will rise about 20 percent to 25 percent to cover the border tax. Economists critical of the plan say currency values may not adjust as much or as quickly as House Republicans say, which could adversely affect importers and U.S. consumers.
No tax-related amendments were voted on during the Senate’s “vote-a-rama” on the budget resolution (S. Con. Res. 3) serving as the vehicle to dismantle Obamacare.
Just 19 of the 186 amendments offered were called up during the seven-hour voting spree that concluded at about 1:30 a.m. on Jan. 12, and most centered on Medicare, Medicaid and health care programs. The Senate passed the resolution 51-48, and the House is expected to vote on it next week—signs that GOP lawmakers have thus far kept to their promise to swiftly kill the law during this Congress.
Several of the amendments offered this week related to the law’s tax provisions, such as an amendment from Sen. Joe Donnelly (D-Ind.) to establish a reserve fund for the repeal of the 2.3 percent excise tax on medical device manufacturers and an amendment from Sen. Jeanne Shaheen (D-N.H.) that bars the Senate from considering legislation that would eliminate the small business tax credit.
Finance Committee ranking member Ron Wyden’s (D-Ore.) amendment requiring presidential candidates to disclose their tax returns also wasn’t called up.
The Internal Revenue Service’s Whistleblower Office made 418 awards to people who reported tax violations totaling more than $61 million in fiscal year 2016, the agency said in a report.
The IRS made awards to significantly more individuals—up more than 300—than last fiscal year. However, the average award size decreased. Whistle-blowers have helped the agency collect $3.4 billion in tax revenue since the office’s inception in 2007.
“Still, the IRS and Congress can’t rest on our laurels,” Sen. Chuck Grassley (R-Iowa) said in a Jan. 12 statement. “The IRS still is not as fast it could be in considering whistleblower information. Whistleblowers often have put their livelihoods on the line to come forward, and they deserve timely answers from the IRS.”
Bipartisan legislation aimed at fighting tax-related identity theft was reintroduced by two House Ways and Means Committee members, James B. Renacci (R-Ohio) and John Lewis (D-Ga.).
Backers expect the Stolen Identity Refund Fraud Prevention Act to help the IRS better uncover ID theft through existing resources. The bill also would establish an operational information-sharing and analysis center to centralize and improve the way information involving potential identity theft is confidentially collected and analyzed.
Further, the bill would establish a centralized point of contact at the IRS for victims, require the agency to notify taxpayers if there is unauthorized use of their identities and create a local law-enforcement liaison within the IRS to coordinate identity theft cases with local police and law enforcement.
To contact the editor responsible for this story: Meg Shreve at email@example.com
The Bloomberg Television interview with Martin Feldstein is at http://src.bna.com/loC. The IRS Whistleblower Office report is at https://www.irs.gov/pub/whistleblower/fy16_wo_annual_report_final.pdf.
Copyright © 2017 The Bureau of National Affairs, Inc. All Rights Reserved.
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