Corporate inversions: Not exactly a home-run campaign issue. But some Democrats are swinging for the fences anyway, including President Obama: “You shouldn’t get to call yourself an American company only when you want a handout from American taxpayers.” He reiterated a call for “economic patriotism” among corporations and a retroactive, speedy end to corporate inversions. Some key Senate Democrats doubt anything can pass before the August recess or even the mid-term elections in November—including the Democratic bill to “Bring Jobs Home.”
Speaking of the “Bring Jobs Home” Act: It certainly sounds patriotic. But that’s about all there is to it. TPC’s Howard Gleckman explains why. “[T]he measure looks a bit like an employment subsidy, and its title certainly implies that it is. But look closely… It wouldn’t subsidize firms that create US jobs at all. Rather, it would reward them for merely moving business units to the US.” For what it’s worth, it wouldn’t stop corporate inversions either.
A higher education tax break passes in the House. The House voted on party lines to consolidate four education tax breaks into a single tax credit for higher education. The credit, with a maximum value of $2500 and available to a taxpayer for four years, would reduce revenue by $96.5 billion over a decade. The House plans to combine this measure with the Child Tax Credit Improvement Act of 2104, scheduled for a vote today. The Child Tax Credit bill would index the credit for inflation and extend the credit to higher-income married couples, but would not maintain a $3000 earnings threshold for the credit’s refundability. Neither measure is expected to live long in the Senate.
What will happen when the Child Tax Credit’s “refundability threshold” climbs in 2018? TPC’s Elaine Maag and Lydia Austin explain in their latest Tax Fact. Right now, the $1000-per-child credit is partially refundable for households earning more than $3,000 a year. Current law will cause that earnings threshold to jump to $15,000 in 2018. High-income families earning above that threshold won’t feel the difference. That’s not the case for low-income families. The share of households eligible for a refundable credit will drop by more than a third, while the average refundable credit will drop from $1000 to $400.
Maybe tax revenues will climb in Oregon with legalized marijuana. According to a new study, the state could generate $38.5 million in revenue in the first year with an average tax rate of $28 per ounce of marijuana. The Oregon legislature’s top tax experts are working on their own estimate, noting enormous uncertainty in the state’s marijuana market. Tobacco sales and tax revenues are declining. Whether the legal marijuana market grows over time remains to be seen.
On the Hill next week: The Senate Finance Committee will review tobacco taxes “owed, avoided, and evaded” at its Tuesday morning hearing, while the Senate Budget Committee will review the economic and budgetary consequences of climate change. The House Judiciary Committee will hold a hearing Wednesday on the need for a special counsel to investigate alleged IRS targeting, while the House Ways and Means Subcommittee on Select Revenue Measures will hold a hearing on the dynamic analysis of the Tax Reform Act of 2014 put forward by Ways & Means Chair Dave Camp.
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