How will lawmakers lower the corporate tax rate? National Economic Council Director Gary Cohn told Bloomberg that he’d like the current 35 percent rate to fall to at least 23 percent in order to be competitive with the average rate of 25 percent for countries in the Organization for Economic and Community Development. Will Congressional Republicans resolve their own differences to get to a rate “with a one in front of it,” as House Freedom Caucus chair Mark Meadows wants? President Trump probably hopes so, continuing his call for a 15 percent rate without specifying a way to pay for it. There are ways, though: Eliminating the interest deduction, for example, could raise $700 billion over ten years according to TPC estimates.
What will become of the mortgage interest deduction? Cohn has indicated that everything is on the table when it comes to tax reform. The Trump administration promised in April that it would protect home ownership deductions, but there may be talk of lowering the cap on the mortgage interest deduction. Current law allows deduction of interest on up to $1 million in mortgage debt plus interest on up to $100,000 of home equity loans.
Senator Mike Lee wants the CBO to “show its work” and share its data. The Utah Republican introduced a bill that would “require the CBO to publish its data, models, and all details of computation used in its cost analysis and scoring.” For any data that the CBO cannot by law disclose, Lee’s bill would require the CBO to cite the law that prohibits disclosure share information on how to contact the individual or entity who has unrestricted access to the data.
Charity groups have some thoughts on a GOP tax idea The Wall Street Journal reports (paywall) that charities are wary of a proposal to double the standard deduction and prevent people from deducting state and local taxes from federal taxable income. The Tax Policy Center estimates that if that were to become law, only 5 percent of taxpayers would have an incentive to itemize their deductions like charitable gifts, compared to 30 percent under current law. Instead, nonprofits suggest a “universal” tax deduction for charitable contributions that taxpayers could use, whether or not they itemize. The Tax Foundation estimates that the new deduction could cost $191 billion over ten years and would disproportionately benefit higher-income households.
In case you missed it: A confirmation. The Senate confirmed David Kautter to be Treasury’s Assistant Secretary for tax policy. Kautter directed the Washington national tax practice of RSM, and spent 30 years at Ernst & Young.
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