A vote today on the compromise TCJA. The House is set to approve the final version of the Tax Cuts and Jobs Act today. The Senate is expected to follow shortly thereafter, perhaps today or tomorrow. Susan Collins, one of two GOP undecideds, announced yesterday she would for vote the bill, giving Republicans enough votes to pass it.
What’s in the TCJA? For a comparison of the conference bill to current law, see the updated chart TPC has added to its analysis of the TCJA.
Who will benefit? The Tax Policy Center’s new analysis for the conference committee bill finds that on average taxpayers would get a $1,600 tax cut in 2018, though about 5 percent of households would pay more. TPC’s Howard Gleckman notes that the top 1 percent would get a tax cut of about $50,000, enough to buy a Mercedes C Class coupe. Middle-income households would get a tax cut of about $900, enough to buy gas for seven months. By 2027, after most individual income tax provisions expire, more than half of taxpayers would pay more than under current law. The Joint Committee on Taxation released its own analysis. The results are somewhat different, mostly because JCT included the effects of the bill’s repeal of the Affordable Care Act’s individual mandate and TPC did not.
How does the TCJA stack up to Candidate Trump’s promises? Gleckman concludes that while the TCJA follows Trump’s basic plan of big tax cuts for business, it is far smaller than what he proposed during the campaign, and it ignored Trump’s promise of big tax cuts for middle income households and no tax hikes for those with high-incomes.
The Senate Republicans are still trying to explain the Corker kickback. Senate Republicans were still playing defense yesterday over allegations that Senator Bob Corker switched to “yes” on the TCJA after conferees added a provision that could benefit his real estate interests. Democrats call it the “Corker kickback.” Finance Committee Chair Orrin Hatch insisted the provision had been in the House version all along. TPC’s Steve Rosenthal told International Business Times that the House bill did not include the special provision.
Not exactly a positive endorsement. Politico reports that Wells Fargo will be among the biggest beneficiaries of the TCJA’s corporate tax cuts, according to a new report by Goldman Sachs. Given the bank’s recent history creating fictitious accounts for consumers and overcharging business customers, that’s probably not an outcome the bill’s supporters were hoping for.
When it comes to taxes, what do taxpayers want? The Washington Post looks at new research from Harvard: Self-employed people are willing to pay hundreds of dollars more in taxes if it means their tax filing is simpler. Researchers also found that simplicity would distribute tax benefits more equally. That’s because under a complex tax system, “less-skilled, less-educated and lower-income workers, … happen to be the most likely to make wrong decisions when filing and… get hit the hardest when the tax code becomes more complex.” Separately, a new Monmouth University poll finds that 26 percent of those surveyed approve of the GOP tax plan, but half think their taxes will go up.
Sympathy for the IRS. Should the TCJA pass, the IRS will have its hands full, to say the least. As former IRS Commissioner John Koskinen said: “We don’t have enough people to do all the work that needs to be done as a general matter, let alone grapple with an overhaul of the tax code.” The IRS said last week that taxpayers will see TCJA-related changes to their paychecks in February. Taxpayers may need to make adjustments later in the year if their withholding does not reflect new law. The agency will work with payroll management firms and tax professionals to make the transition to the new law as smooth as possible.
Fewer Apples in India? Prime Minister Narendra Modi launched a “Make-in-India” program to expand the domestic industrial base—including the electronics industry. The government has increased its import tax from 10 percent to 15 percent on dozens of electronic products, including mobile phones. Most of Apple’s iPhone models will become more expensive in the subcontinent as a result. Apple’s revenue growth is already slowing in India’s $10 billion smartphone market.
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- © Urban Institute, Brookings Institution, and individual authors, 2016.