- January 15, 2020
- Posted by: detaxify
- Category: Tax Law
In case you missed it, the US budget deficit is up again. Treasury reported this week that the US budget deficit in the first quarter of fiscal year was 11.8 percent higher than the same period in 2019, up from $318.9 billion to $356.6 billion. Treasury estimates the deficit will top $1 trillion in fiscal year 2020, the highest since the 2008 financial crisis.
New Jersey has a SALT workaround. Democratic Governor Phil Murphy signed a bill yesterday to allow pass-through business owners to pay state income taxes at the entity level rather than at the individual level. It would exempt them from the Tax Cuts and Jobs Act’s $10,000 cap on state and local tax deductions for individual itemizers. The New Jersey law takes effect for the 2020 tax year.
Arizona GOP Governor Doug Ducey will propose individual tax cuts. Arizona’s individual income tax rates range from 2.59 percent on income up to $26,500 a year to 4.5 percent on earnings above $318,000. Ducey wants to reduce those rates, and will offer specifics during his state of the state address next week.
Iowa Democratic Governor Kim Reynolds would raise sales taxes to fund water quality and mental health programs. In her address to the state this week, Reynolds outlined her plan to raise the sales tax by 1 percentage point (or one cent) to 8 percent. The increase would raise about $270 million in the first six months. Reynolds also wants to use the state’s general fund to pay for a greater share of mental health services. This would take the funding burden off counties, which currently use property taxes to fund those programs. The additional sales tax revenue also would offset a 10 percent cut to the state’s income tax.
Georgia lawmakers work to close an online sales tax loophole. Lawmakers in the Georgia Senate and House have a bill to close a loophole that lets big retailers avoid collecting sales tax from “marketplace facilitators” whose websites or apps are used to sell goods or services provided by a third party. Georgia could collect hundreds of millions of dollars more in sales tax revenue by closing the loophole.
New York State can’t stop sending tax relief checks to certain delinquent residents. The New York State tax department is sending school tax relief checks to homeowners, even if the homeowner is delinquent in tax payments. The problem is two-fold: The state does not require local governments to forward information about delinquent taxpayers, and state statute doesn’t allow the state to withhold advance payments. The tax department can only recover the money if a taxpayer is caught during an audit. Will state lawmakers enact a fix?
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].