Non-profits, Caregivers, Carbon Capture, and State Tax Developments

Taxes

Do tax-exempt non-profits have a future? Maybe not. TPC’s Howard Gleckman writes that the Tax Cuts and Jobs Act slashed the number of households claiming the tax deduction for charitable giving, and the IRS has too few resources to oversee non-profits. At the same time, the very wealthy are disrupting the sector by using limited liability corporations instead tax-exempt foundations to give away their money. For a deeper dive, check out TPC’s recent event on taxes and charities.

Happy National Caregivers Day! Democratic presidential candidate Mike Bloomberg has  proposed a pilot project to extend the Earned Income Tax Credit (EITC) to family caregivers. This National Caregiver Day, Elaine Maag examines the Economic Security Project’s (ESP) proposal to make family caregivers eligible for its cost-of-living refund, an expanded EITC.  TPC estimates  that about 2.6 million families with few or no earnings from paid employment could claim the caregiving benefit in 2020, worth about $180 billion over 10 years. The benefits would be highly concentrated among low-income families. 

IRS issues guidance for carbon capture tax credits. The agency described how businesses can claim the section 45Q tax credit for equipment that captures carbon from the atmosphere—a developing technology. Businesses can claim a credit of $20 per metric ton of carbon oxide if they begin construction of a capture facility before 2024. 

Maryland House Democrats want to expand the sales tax to professional services. They’d cut the state sales tax rate from 6 percent to 5 percent but tax professional services. Education, health care, and services provided by nonprofit or civic organizations would be exempt. Revenue would support a major overhaul of public education. State senate leaders have not commented on the proposal.

In California, a bill to exempt military retirement pay from state income tax. California and six other  states currently tax military pay. Republican state Sen. Brian Jones introduced legislation to exempt California vets  from paying state income tax on their retirement pay. Jones wants to “help keep veterans and their families in California.” Jones is running to represent California’s 50th Congressional District. 

Another tax cut in Georgia? Republican lawmakers are ready to cut state income tax rates for the second time in two years. In 2018, Georgia reduced the rate from 6 percent to 5.75 percent at a cost of about $500 million annually. The Georgia House leadership now backs  a cut to  5.5 percent. The legislature just approved a budget that scaled back some of Governor Brian Kemp’s proposed spending cuts, in part because the 2018 tax cuts slowed tax collections. 

Would better marketing have helped Utah’s tax reform effort? Utah’s GOP-controlled  legislature passed and then repealed a tax cut  for most households in the state. But a recent poll finds that 60 percent of voters thought their taxes would go up. The sales tax would have indeed climbed and expanded under the plan but other taxes would have been cut. Meanwhile, the Utah State Tax Commission released the latest revenue collection figures for the fiscal year that began in mid-2019. The state’s general fund and education fund revenue collections were $4.3 billion—7.6 percent more than this time last year. The economy is doing well, say lawmakers, so tax reform (tax cuts?) remains necessary.

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 dailydeduction@taxpolicycenter.org.

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