Tax Refund


SALT bill doesn’t advance in the House. The chamber blocked a procedural measure for the SALT Marriage Penalty Elimination Act, with 225 against and only 195 in favor, per Politico Pro (paywall). The bill calls for raising the federal cap on state and local tax (SALT) deduction from $10,000 to $20,000 for joint filers with adjusted gross income of up to $500,000.

How does the federal income tax system worsen racial disparities? A new TPC feature examines four key issues of the tax code that contribute to inequities between people of color and White people. Lower tax rates for capital gains and retirement savings overwhelmingly benefit wealthy White families; tax subsidies for homeownership have worsened historical racial inequities in housing; Black taxpayers are also more likely to be audited by the IRS than other taxpayers. It concludes with suggested reforms that could help support the prosperity of all families.

Supreme Court of Ohio confirms cities’ collection of income tax from non-resident remote workers. The court ruled as constitutional an Ohio law allowing cities to temporarily collect income tax from remote workers who lived outside city limits during the COVID-19 pandemic. It found the state had a legitimate interest in assuring municipal revenues remained stable while employees were required to work from home. The court rejected a worker’s claim that allowing Cincinnati to tax his income while he worked at his Blue Ash, Ohio home violated the US Constitution.

To save more for Social Security, should Congress repeal tax incentives to save for retirement? TPC’s Howard Gleckman reviews the recommendation of Andrew Biggs, a former deputy administrator of the Social Security Administration, and Alicia Munnell, who served as a Treasury assistant secretary during the Clinton administration. They say that slashing tax subsidies for private retirement savings and shifting the new revenue to Social Security would preserve future Social Security payments to low- and moderate-earners, while buying Congress time to make needed structural changes to Social Security. Howard concludes that the idea is worth considering but cautioned that it could come with some notable downsides.

Tax policy and conservation easements continue to confound. TPC’s Renu Zaretsky takes stock of the use and sometimes abuse of the tax deduction for donated conservation easements. Lawmakers and the IRS have worked to prevent some abuse of the tax break that aims to boost the preservation of natural habitats, but more can be done. 

 

For the latest tax news, subscribe to the Tax Policy Center’s Daily Deduction. Sign up here to have it delivered to your inbox weekdays at 8:00 am (Mondays only when Congress is in recess). We welcome tips on new research or other news. Email Renu Zaretsky at [email protected].

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