The Senate Finance Committee begins marking up its tax bill this afternoon. You can tune in at 3pm to watch the panel debate its version of the Tax Cuts and Jobs Act. The Joint Committee on Taxation has estimated the revenue effects of the bill: It would lose $1.496 trillion over the first decade, and nearly $217 billion in 2027 alone. JCT projects that every income group, on average, would see tax cuts each year from 2019 to 2027, though some households would pay more tax than under current law. Senate Majority Leader Mitch McConnell explained to The New York Times that “You can't guarantee that absolutely no one sees a tax increase.”
The House gears up to vote on its tax bill this week. On Wednesday, the Rules Committee will consider the House version of the TCJA to prepare for a floor vote later this week. The House bill would reduce revenue by $1.4 trillion over the next decade and by $171 billion in 2027. JCT estimates that the bill would cut taxes, on average, for all income groups in 2019. However, taxes would increase, on average, for those earning between $20,000 and $40,000 once family tax credit expire and less generous indexing of the tax code begins to bite.
The two bills have more in common than you might think. TPC’s Howard Gleckman compares and contrasts the Senate and House versions. He says that they both include big tax cuts for business and modest tax reductions for households, and both have a serious fiscal problem. “If the Senate is to pass a bill with just 51 votes, the tax cut cannot add to the deficit after 10 years. But both the House Ways & Means Committee bill and the Hatch draft result in large tax cuts in the 10th year… don’t be surprised if even the relatively modest rate reductions in the Senate bill are scaled back further before Congress passes a final tax cut.”
And a preview of the battles ahead. Senate Finance Committee member Pat Toomey of Pennsylvania says of the state and local tax (SALT) deduction: “There's no good reason why federal taxpayers all across the country should have to subsidize, have to pay a higher federal tax rate, to subsidize those municipalities that choose to have high taxes.” The Senate’s TCJA repeals the SALT deduction completely. But House Ways & Means Chairman Kevin Brady says the House won’t accept that. When Fox News’ Chris Wallace asked Brady whether he could guarantee that the final tax bill would preserve at least part of the deduction, Brady replied, “I can.”
Speaking of the Keystone State. Pennsylvanians just voted to allow their state legislature to exclude up to the full value of owner-occupied homes from property taxes. That could place a greater burden on income taxes to fund public schools. If the federal tax overhaul eliminates the state and local tax deduction, the Associated Press explains how some income taxpayers in the state could face a “double-whammy” of a tax hit.
Meanwhile, in South America… Coca-Cola may withdraw part of its promised four-year $1 billion investment in Argentina. That’s because the Argentinian government proposed to raise sales taxes on soft drinks from 8 percent to 17 percent. The plan will go to the nation’s congress today.
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