The voices of Tax Policy Center's researchers and staff
The House GOP Budget: No tax reform details. The House Budget Committee unveiled a budget with $5.5 trillion in spending cuts that promises balance by 2024. Committee Chairman Tom Price is confident the budget will pass the House this week. However, TPC’s Howard Gleckman says there is no chance it will become law. The budget contains no tax reform details but calls for a comprehensive revamp of the revenue code. The Senate Budget Committee plans to mark up its fiscal plan this afternoon.
Dynamic scoring: Imperfect assumptions yield questionable results. In the latest contribution to TaxVox’s dynamic scoring forum, the Congressional Research Service's Jane Gravelle takes a peek inside the black box that estimates macroeconomic effects of legislation. The Joint Committee on Taxation’s analyses of the Camp tax reform proposal relied on two models. She questions one of them, given its “perfect information and perfect foresight, and its inability to model a stand-alone tax policy.” Even with the other one, macro effects of broad based tax reform are likely to be very small.
In Wisconsin, a forecast is cause for limited optimism. After using a $1 billion surplus last year for tax cuts, Wisconsin’s GOP Governor and presidential hopeful Scott Walker offers tax increases and tax relief in his 2015-2017 budget. He’d raise state taxes and fees by $48 million for certain business sectors, hire more than 100 auditors to collect an additional $125 million in revenue, and direct $300 million in state aid toward property tax relief. The state’s Legislative Fiscal Bureau estimates that the Governor’s budget could generate a $500 million surplus. If a surplus is still likely in a year, the GOP Assembly Speaker Robin Vos says he might consider more state tax cuts.
Governor Chris Christie’s tax incentives: A “new tomorrow” and a new industry? The heavily Democratic city of Camden received $630 million out of $2 billion in state tax breaks to boost economic development since 2014. The GOP governor and presidential hopeful touts this as part of a “New Jersey comeback,” but most of the people taking jobs in Camden were already working just a few miles away. One industry has grown, though: Sales of tax incentives. Under New Jersey law, companies can sell unused tax breaks to unrelated firms looking to reduce tax liabilities.
In the United Kingdom: A plan to bequeath homes, tax free. The Chancellor of the Exchequer and Second Lord of the Treasury George Osborne would allow parents to pass ownership of a primary residence worth up to £1 million pounds to their children without paying any inheritance tax. The Treasury's analysis of the tax indicates that “those already living in the wealthiest fifth of households are most likely to receive an inheritance.” The UK Treasury also warns that “people will increasingly concentrate the value of the assets in their estates in their main residence, pushing up its value. It will also push up house prices and possibly rents.” If Lord Grantham only knew.
The estate tax will be examined on the Hill today. The House Ways and Means panel’s Subcommittee on Select Revenue Measures holds a hearing today on the burden of the estate tax on family businesses and farms.
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