The House will vote on the Senate budget resolution on Thursday. Under pressure from President Trump and business interests, the House will consider adopting the Senate version without a conference committee to work out differences. Fiscal hawks prefer the House version that calls for $203 billion in spending cuts but conservatives also want to expedite tax legislation. Republican Study Committee chairman Mark Walker said his group will support the Senate budget resolution “based on the premise of beginning markup of tax reform legislation within a couple of weeks.”
President Trump tweets “NO” to changes in 401(k) contributions. “This has always been a great and popular middle class tax break that works, and it stays!” wrote the President yesterday morning. Only about a third of workers are saving in a 401(k) or similar tax-deferred retirement plan, and two-thirds of the tax benefits go to those in the top one-fifth of income. TPC shows that tax expenditures for retirement saving topped $158 billion in 2015 and will likely exceed $1 trillion between 2015 and 2019.
And “probably not” on a fourth tax bracket. Trump also told Fox Business Network that he’d only add a fourth tax bracket to the GOP plan if he felt “the middle class is not being properly taken care of.” The question he didn’t answer: How would he pay for trillions of dollars in business rate cuts?
A 20 percent corporate income tax would be a short-run boon for foreign investors. TPC’s Steve Rosenthal estimates that foreign investors own about 35 percent of US corporate stock and thus would receive about one-third of the short-run benefit if Congress cuts the corporate tax rate cut from 35 percent to 20 percent. That’s about $70 billion a year. Rosenthal told CNNMoney, “We plan to deficit-finance this large relief for foreign investors, but future generations of US taxpayers would eventually repay the shortfall through new taxes or spending cuts.”
Moody’s Analytics doesn’t expect growth from the GOP tax plan. Its chief economist Mark Zandi writes “While the proposal is light on many important details, taken in total, it would not add significantly to economic growth, but it would add significantly to future budget deficits and the nation’s debt load.” His conclusion comes from simulations using Moody’s Analytics macro-economic model, similar to models used by the Federal Reserve, CBO, and Joint Committee on Taxation.
France’s President: Not Robin Hood. Emmanuel Macron is trying to defend his proposal to reduce taxes on personal assets over €1.3 million ($1.5 million) while cutting housing subsidies for the poor. Cutting the tax on personal assets would reduce revenues by about €400 million, equal to the proposed cut to housing subsidies. Coincidence? Macron’s opposition doesn’t think so.
Argentina’s President: Cutting taxes and cutting spending, too. Mauricio Macri wants tax cuts and austerity measures. “We can’t keep taking on debt forever and Argentines can’t afford to pay more taxes, so we have to move towards lowering taxes too,” Mr. Macri said. He’s not kidding: Re-elected Sunday, he raised gasoline prices by about 10 percent yesterday in order to reduce the fiscal deficit and curb double-digit inflation.
In the United Kingdom: London began taxing owners of old polluting vehicles yesterday. The London Atmospheric Emissions Inventory found that nearly 95 percent of Londoners live in areas with high air toxicity, at levels exceeding World Health Organization standards by 50 percent or more. Drivers of most diesel and gas vehicles registered before 2006 will pay a £10 ($13) “T Charge” when entering central London between 7 am to 6 on Monday to Friday. A driver of an affected vehicle will pay this tax as well as London’s congestion charge of £11.50 per day.
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