Context, Heartbeats, and Investments

TPC’s Bill Gale puts JCT’s score on the Inflation Reduction Act in context. Gale notes that the Joint Committee on Taxation analysis suggests that taxes would increase at nearly every income level. But Bill cautions that other factors should be considered before drawing conclusions about how the Manchin-Schumer compromise climate and tax bill would affect taxpayers. Specifically, the bill’s corporate minimum tax applies only to firms with $1 billion or more in profits, who are more likely to have “excess” profits that benefit high-income managers and executives more than other workers. Bill concludes that “the corporate minimum tax under discussion, while not perfect policy, would be highly progressive.”

In Georgia, an embryo can now earn a tax filer a dependent exemption on state tax returns. Lawmakers passed and an appeals court affirmed the Living Infants and Fairness Equality (LIFE) Act, which defines a “natural person” as “any human being including an unborn child.” The Georgia Department of Revenue announced this week that it will “recognize any unborn child with a detectable human heartbeat … as eligible for the Georgia individual income tax dependent exemption” worth $3,000 for an unborn child on or after July 20, 2022 through December 31, 2022. Should the Department request it, a filer will have to provide relevant medical records or other supporting documentation for that exemption.

Cryptocurrency should be taxed for what it is: An investment. So argues TPC’s Howard Gleckman, who writes that cryptocurrency promoters seem to want to have their virtual cake and eat it too. If consumers use crypto to buy things, promoters want the IRS to treat crypto as money. But crypto paid as compensation to miners and stakers, promoters say, should be treated as property, with minimal involvement of the Securities and Exchange Commission. For now, Howard concludes, cryptocurrency is largely an investment. It’s how its marketed and tax laws should continue to treat it that way.   

What to do with Montana’s budget surplus? State Republican lawmakers are at odds over the best use of the state’s $1 billion budget surplus. There are calls to hold a special legislative session to pass tax rebates of up to $3,000 per taxpayer before the end of the year. But others caution that rebates could be inflationary, and prefer debt repayment, adding to rainy day funds, or property tax reductions. GOP Gov. Greg Gianforte’s office says it’s “committed to permanent tax relief with a fiscally responsible budget.”

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