Tax Fun in the Summertime?

Congress is in recess this week. The Daily Deduction will resume its regular schedule on Monday, February 23. 

Tax reform's narrow window, according to House Ways and Means Chair Ryan. "I just think knowing the way the budget process works on tax reform that if we haven't done it in 2015, which is effectively through summer, it won't happen," he said. The Hill reports that he thinks business tax reform could happen first, but the currently divided government doesn't make that a sure thing. The New York Times notes that Ryan would be satisfied this year if businesses who file through the individual code got a simpler code and lower taxes. But Ryan estimates that the whole reform process could take one to three years. In two years, by the way, there'll be a new president and a new Congress.

Meanwhile, the House restored a set of expired tax breaks without any plan to pay for them. On Friday it approved a bill, adding $14.2 billion to the deficit over 10 years, to make permanent three tax breaks for charitable giving: Deductions for contributions of food inventory, allowing tax-free distributions from individual retirement accounts for charitable purposes, and  deductions for contributions of conservation easements to preserve land. It also approved a bill, adding $79 billion to the deficit over 10 years, to permanently allow small business to write off as much as $500,000 in capital investment in the year it is acquired.

Would tax changes in Ohio be good for its businesses? Republican Governor John Kasich would cut the state's individual income tax by 23 percent over two years and cut income taxes by $693 million for certain small businesses. But he'd also boost the commercial activity tax for larger firms, raise the sales tax rate  from 5.75 percent to 6.25 percent, boost the cigarette tax by $1 per pack, and impose higher fracking taxes. The Ohio Council of Retail Merchants' President Gordon Gough said of the plan: "We've got some concern with it. Anytime you raise the sales tax it has a direct effect on consumer spending, which could hurt retail sales."

The Affordable Care Act tax penalty just went up if you remain uninsured. The latest enrollment deadline passed yesterday. Now, every adult without insurance will be  subject to a minimum penalty of $325 when filing their 2015 taxes next year. There are, however, over 30 exemptions to the penalty relating to income levels, Medicaid expansion, and hardship.

On Tuesday, February 24: Find out how tax filing could help the uninsured avoid future penalties. TPC and the Brookings Institution will sponsor a panel on how tax filers are affected by the Affordable Care Act. One question: Would bringing the ACA enrollment period in line with tax filing season boost participation in the insurance program?  Learn more at the event or on the webcast with H&R Block's Mark Ciaramitaro, Center on Budget and Policy Priorities' Tara Straw, TPC's Len Burman, and the Urban Institute's Stan Dorn.

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