A Grain of SALT? House Ways & Means chair Kevin Brady acknowledges that Congress won’t fully repeal the state and local tax deduction. Now GOP leaders are looking for a compromise with Republican lawmakers from high-tax states. Perhaps a credit or a phase-out. One idea on the table: Giving taxpayers a choice between the SALT deduction and the mortgage deduction. Not exactly simplification though.
The budget battle joined. The House version was on the floor yesterday and leaders hope to finish today. The Senate version, including $1.5 trillion for tax cuts, is working its way through the budget committee. In the end, Democrats won’t have much to say about the final agreement. The real fight will be between House Republicans, some of whom still want to use the fiscal framework to cut spending, and Senate Republicans, who seem to care only about the budget as a vehicle for a tax bill.
Tune in this morning to see CEA Chair Kevin Hassett. TPC’s Distinguished Speaker Series starts today at 9:30 am. Council of Economic Advisers Kevin Hassett will discuss the US fiscal outlook and tax reform. His talk is co-hosted with the Tax Foundation. The webcast is here.
How should tax reform treat employee stock and options? TPC’s Donald Marron has a new brief that shows how the US tax system treats the most common forms of equity compensation. That includes stock, restricted stock, and stock options. For the most part, this type of compensation is taxed just like cash, wages, salaries, and bonuses. Donald argues that policymakers should maintain this equal treatment in any tax reform.
Conservative Democrats in Congress find some things to like in the Unified Framework. The Blue Dog Coalition, which includes 18 House Democrats, is open to lowering business taxes, including both corporate and pass-through business tax rates. Most other Democrats have opposed such tax cuts.
Meanwhile, there’s a hidden tax increase in the unified framework. TPC’s Howard Gleckman explains a provision that could raise taxes on many middle-income households: “By using a less generous—though perhaps more accurate—measure of inflation, it would result in people paying higher income taxes than under current law.”
The IRS provides tax relief to residents of Puerto Rico and the Virgin Islands. People who leave the islands for as long as 117 days will be able to retain their residency status, according to an emergency IRS notice. Many residents have left the islands in the wake of massive damage from hurricanes Irma and Maria.
Prepare for states’ 2018 legislative sessions with a new compendium. To help lawmakers, journalists, and the public understand next year’s state budgets, the Urban Institute’s State and Local Fiscal Initiative (SLFI) and the Tax Policy Center have combined their research in this compendium. It covers federal tax and spending proposals, state taxes, Medicaid, education, public pensions, criminal justice, economic development, immigration, and more.
Is a new income tax the answer to a small Midwestern town’s woes? The Tax Hound considers the plight of Benton Harbor, Michigan, home to an annual half-triathlon, but, increasingly, to fewer residents.
Facebook’s UK tax bill just climbed. The social media giant paid £5.1 million in UK tax in 2016, up from £4.2 million in 2015. Facebook changed its tax structure last year. Facebook UK, rather than Facebook Ireland, now invoices larger advertisers.
And the European Union would like others’ tax bills to climb. The EU is taking Ireland to the European Court of Justice, arguing the country failed to recover up to €13 billion of tax due from Apple. Also yesterday, the EU told Amazon to pay €250 million in back taxes to Luxembourg.
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