On The Money: Smaller tax refunds put GOP on defensive | Dems question IRS on new tax forms | Warren rolls out universal child care proposal | Illinois governor signs bill for $15 minimum wage

Happy Tuesday and welcome back to On The Money. I'm Sylvan Lane, and here's your nightly guide to everything affecting your bills, bank account and bottom line.

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THE BIG DEAL--Smaller tax refunds put GOP on defensive: The Trump administration and key GOP lawmakers are playing defense after early data showed Americans are getting smaller tax refunds in the first filing season under the GOP tax law.

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The average refund size through Feb. 8 was 8.7 percent smaller than the same period last year, according to IRS figures. Democrats have seized on the numbers, arguing they prove that the 2017 tax-code overhaul by Republicans was a "scam" designed to help the wealthy at the expense of the middle class.

Republicans have pushed back, emphasizing that most people are seeing a reduction in their total tax liability and that smaller refunds are preferable because they mean taxpayers were paying a more accurate amount throughout the year via their paychecks. The Hill's Naomi Jagoda explains what's going on. 

Reactions: 

 

LEADING THE DAY

Warren rolls out universal child care proposal: Sen. Elizabeth WarrenElizabeth Ann Warren2020 Dems break political taboos by endorsing litmus tests Biden says Congress must move to protect abortion rights Harris seeks Iowa edge with army of volunteers MORE (D-Mass.) on Tuesday rolled out a proposal to provide universal access to child care, unveiling a major part of her policy platform as more and more Democratic candidates enter the presidential race.

"My plan will guarantee high-quality child care and early education for every child in America from birth to school age," Warren wrote in an essay on Medium. "It will be free for millions of American families, and affordable for everyone. This is the kind of big, structural change we need to produce an economy that works for everyone." Naomi Jagoda breaks down the plan here.

The major highlights:

  • The federal government would partner with local governments, nonprofits, faith-based organizations and others to create a network of options for child care.
  • Families making less than 200 percent of the federal poverty line would receive free child care, and families making more than that would pay no more than 7 percent of their income to send their children to a child-care provider.
  • Warren said that she would pay for her child-care proposal by using some of the revenue generated by her proposed wealth tax, which economists at the University of California, Berkeley said would raise about $2.75 trillion over 10 years.

 

Dems question IRS over new tax forms: Two key House Democrats are asking the IRS for information about third-party analyses of the new tax-filing "postcard," after the agency's in-house watchdog expressed concerns about the forms.

Ways and Means Committee Chairman Richard NealRichard Edmund NealDemocrats sense new momentum in Trump tax return fight IRS draft memo found that agency must provide tax returns to Congress: report Senate passes bill to undo tax increase on Gold Star military families MORE (Mass.) and Rep. John LewisJohn LewisPelosi receives John F. Kennedy Profile in Courage Award Schumer calls on McConnell to hold vote on Equality Act House approves anti-LGBT discrimination Equality Act MORE (Ga.), head of the panel's oversight subcommittee, wrote in a letter last week to IRS Commissioner Charles Rettig that they are seeking the information "so that we may better understand the full extent of any due diligence on the usability of the postcard by taxpayers."

What to know about the tax "postcard": The Treasury Department and IRS last year unveiled a smaller Form 1040 after Republicans pledged that their 2017 tax-code overhaul would let people file their taxes on a form the size of a postcard. The new form, which taxpayers are using for the first time during the current filing season, is smaller than the previous version but also moves some items that were on the old form to separate documents known as schedules.

Watchdog warning: National Taxpayer Advocate Nina Olson said the new schedules could increase the odds of taxpayer errors since the information will be dispersed over several pages and taxpayers will need to cross-reference and transfer data.

Naomi Jagoda has the details here.

 

Illinois Gov. signs bill raising minimum wage to $15: Illinois Gov. J.B. Pritzker (D) signed a bill into law Tuesday to raise the state's minimum wage to $15 an hour by 2025.

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Pritzker ousted former-Gov. Bruce Rauner (R) in November and campaigned on raising the minimum wage. 

The state's minimum wage is currently $8.25 an hour. It will rise to $9.25 an hour on Jan. 1, 2020 then to $10 an hour that July. After that the minimum wage will increase by $1 each year until 2025.

 

GOOD TO KNOW 

 

ODDS AND ENDS

  • New Zealand's government is considering a plan to tax multinational tech corporations at a higher rate, citing a disparity between the taxes paid by New Zealanders and large corporations such as Facebook and Google.