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Rates, Research, Refunds, and Revenues

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Treasury Secretary Janet Yellen: Higher interest rates would be “a plus.” Yellen tells Bloomberg News that President Biden should push his $4 trillion in new spending, even if it  triggers inflation and higher interest rates that persist into next year. “If we ended up with a slightly higher interest rate environment it would actually be a plus for society’s point of view and the Fed’s point of view,” she said. “We’ve been fighting inflation that’s too low and interest rates that are too low now for a decade.” 

Clarifying Biden’s new tax on unrealized capital gains at death. TPC’s Howard Gleckman clears up the confusion over what Biden has proposed, and who would pay higher taxes. The president is not proposing to directly change the estate tax, but would significantly raise taxes for a small number of very wealthy decedents. 

On June 24, the 11th Annual IRS-TPC Joint Research Conference on Tax Administration.  You can attend virtually the only annual conference focused exclusively on tax administration research. Researchers from the IRS, other government agencies, academia, and private organizations will discuss some of the latest analyses seeking to make tax administration as effective as possible. The agenda is here. Learn more and register here

Speaking of tax administration: Some checks are in the mail! The IRS has begun sending tax refunds to more 2.8 million tax filers who paid 2020 income taxes on some of their unemployment benefits. They earned less than $150,000 in adjusted gross income in 2020 but paid their taxes before Congress passed the American Rescue Plan, which exempts the first $10,200 in unemployment benefits from federal income tax. 

Seattle’s JumpStart tax survives King County Superior Court challenge. A King County judge tossed out the lawsuit filed by the Seattle Metropolitan Chamber of Commerce. The Chamber called Seattle’s new tax on high-earning workers at big businesses “illegal, invalid, and unenforceable.” But Judge Mary Roberts ruled the tax applies to businesses, not their employees and is a permissible excise tax on the privilege of doing business. The tax rate   ranges from  0.7 percent to 2.4 percent on salaries and wages paid to Seattle employees who make at least $150,000 per year. 

In one Michigan county, pot taxes will fund equity programs. In Washtenaw County, home to the University of Michigan, the County Board of Commissioners approved a budget amendment to allocate the annual revenue from marijuana taxes toward racial equity-based programs and initiatives. Revenues will generate more than $200,000 annually, according to county officials. The county said the war on drugs had a disproportionate impact on Black and Brown communities. The revenue will fund the county’s racial equality policy.   

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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