Same-sex marriage to boost state tax revenue
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By Bankrate
The Supreme Court’s ruling legalizing same-sex marriages across the United States was a victory for the couples who long fought for equal marital rights.
It also could prove to be a reason for state treasuries to celebrate.
The Williams Institute at the UCLA School of Law says that the increased number of weddings could produce a national economic boost of up to $2.6 billion in just the first three years that same-sex marriage ceremonies are performed nationwide.
That should lead to a total of $184.7 million in new tax revenue, says the law school think tank.
More wedding money
The money, according to the group’s data, will come from the expanded wedding services as gay and lesbian couples head to the altar.
Businesses that provide wedding planning, catering, venue and myriad other wedding-related services naturally will see their incomes and taxes increase.
So will ancillary industries, such as the travel and lodging sectors that will have the couples’ out-of-town wedding guests as new customers. This spending boost can lead to an increase in state and local tax revenue and an influx of tourism dollars that benefit local businesses.
More state income taxes possible
In addition, the Williams Institute estimates more than 13,000 new jobs will be created nationwide, thanks to the growing number of nuptials.
For the 41 states that collect income taxes, that will mean additional taxes from the new workers within their borders.
Some states also could see increased tax collections simply from the new couples’ filing status changes.
Now that same-sex couples can fill out returns as married filing jointly in states with income taxes, some of the new married couples could see their taxes go up as their combined incomes push them into higher tax brackets.
No income tax, no problem
Even the states that don’t levy individual income taxes should benefit substantially.
In my home state of Texas, for example, Williams Institute researchers estimate that more than 23,000 couples will marry during the first three years of legal same-sex marriage, providing the Lone Star treasury with nearly $15 million in tax revenue on total wedding spending of almost $182 million.
The financial forecast is similar for Florida, another large, no-income-tax state that offers lots of beach venues where couples can exchange vows.
Tax planning for all
Of course, the opposite is true, too. States could see a dip in their revenue, thanks to the newly married same-sex couples.
This might happen, for example, if only one spouse works. By now being able to file a joint state tax return, the same-sex newlyweds could see lower tax bills.
So states, just like their taxpaying residents, will be doing some tax planning to see how the new marriage equality law affects their bottom lines.
Generally, however, more wedding business will be good not only for the happy couples, but for the states’ economies and tax collectors.
Herman and Company CPA’s proudly serves Bedford Hills NY, Chappaqua NY, Harrison NY, Scarsdale NY, White Plains NY, Mt. Kisco NY, Pound Ridge NY, Greenwich CT and beyond.
IRS urged to go more digital
Westchester NY accountant Paul Herman of Herman & Company CPA’s is here for all your financial needs. Please contact us if you have questions, and to receive your free personal finance consultation!
By Bankrate.com
The technical glitches at the New York Stock Exchange and United Airlines, not to mention the recent hacking of the Internal Revenue Service’s “Get Transcript” online service, might tend to make people back off of technological solutions.
One tax advisory panel, however, thinks more online IRS access is just what taxpayers need.
Taxpayers increasingly prefer digital self-service to phone and paper methods, according to the Electronic Tax Administration Advisory Committee, or ETAAC. This all-volunteer group serves as the focal point for, as its name indicates, electronic tax administration issues.
“The IRS needs to transform its taxpayer service and compliance capabilities for efficiency through digital tools,” ETAAC members said in their 2015 annual report to Congress. “While the IRS is making progress to plan for the development of digital tools, the IRS needs to accelerate its strategy to overcome service shortfalls.”
Comprehensive and easy-to-use IRS digital service tools, says ETAAC, will reduce the taxpayer burden, increase compliance and improve taxpayer service.
TIGTA agrees, with caveats
Meanwhile, the Treasury Inspector General for Tax Administration, or TIGTA, agrees that technology improvements are crucial to future tax collection success and taxpayer satisfaction. The IRS watchdog office warns, however, that any expanded online options must be contingent on key technology and security upgrades.
“As taxpayers continue to be provided with the electronic products and services they desire to interact and communicate with the IRS, the risk associated with unauthorized access to tax accounts will continue to grow,” said TIGTA’s J. Russell George in a statement accompanying his office’s recent look into IRS electronic services.
“As such, completion of those technology projects that improve online service while mitigating the risks must be a priority,” George noted.
Continuing IRS money troubles
The recommendations of the two panels are no surprise to the IRS. The agency has increasingly turned to digital and online services in recent years, primarily to fill gaps in personal customer service that the agency says are the result of insufficient funding. The revenue shortage also affects digital solutions.
“Any proposed strategy must consider our limited funding and finite resources for high-priority information technology projects and other investments across the agency,” the IRS said in a statement in response to the TIGTA report.
Both TIGTA and ETAAC agree that money is a problem.
“The IRS also needs to closely collaborate with Congress to assess its investment decisions and allocate its resources appropriately,” notes the ETAAC report. “This will ensure that Congress invests in key areas necessary for long-term improvements to taxpayer service and compliance.”
Similarly, TIGTA’s audit found that additional IRS funding needs to be committed to fully complete the agency’s key information technology projects.
Congressional intransigence
But getting the dollars from Capitol Hill is easier said than done, especially since the IRS has remained in congressional crosshairs for the past few years. The Republican-led House and Senate have slashed the IRS’ budget as punishment for the agency’s handling of the Tea Party 501(c)(4) nonprofit status controversy.
Will Congress eventually loosen the purse strings so that the IRS can keep pace with the digital tax solutions that taxpayers demand? Under normal (as far as that word can be used in connection with Congress) circumstances, I’d say yes.
But with the IRS an easy target and the 2016 election year on the horizon, look for federal lawmakers to continue to punish the IRS financially in order to make political points.
Unless we taxpayers can persuade our representatives and senators to change their minds, we’ll just have to hope the IRS can cobble together the safe and useful digital solutions we want and need.
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Any U.S. tax advice contained in the body of this website is not intended or written to be used, and cannot be used, by the recipient for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code or applicable state or local tax law provisions.