Will Republicans campaign on the 2017 tax cuts? Maybe not, explains The New York Times. The economy grew 4.1 percent between April and June and Treasury Secretary Stephen Mnuchin insists it could sustain such growth for four to five years. But Republicans aren’t making the connection between the Tax Cuts and Jobs Act and the strong economy. Instead they are making general promises of more jobs and a crackdown on illegal immigration. Why? “[H]otly contested midterm campaigns… have historically been referendums on the sitting president. The last time the economy grew 4 percent in a quarter was in the middle of 2014” during President Obama’s second term. Senate Democrats lost their majority that fall.
No SALT relief in the next tax bill. At least, House Ways & Means Committee Chair Kevin Brady is no fan. He told reporters on Friday that he’ll retain the Tax Cuts and Jobs Act’s $10,000 limit on the state and local (SALT) tax deduction in what he calls Tax Reform 2.0. The plan, which Brady would like the House to vote on in September, would also retain the TCJA’s individual income tax cuts that are due to expire in 2025.
Meanwhile, a spending bill looms. President Trump had vowed never to sign an omnibus spending bill again, but Congress may need to approve one anyway. Lawmakers were supposed to work out differences in House and Senate appropriations bills on July 12, but that meeting never took place. And then there is border wall funding. Deeply divided congressional Republicans had said they may put off a vote until after the midterms. But yesterday, Trump again threatened to veto a spending package and shut down the government unless he gets money for the wall. The spending bill deadline is September 30, but with the House in recess through most of August and part of September, there is little time to work it all out.
Corporations—and professionals sports—could feel a TCJA kick. Corporations can no longer deduct 50 percent of business entertainment expenses—like luxury suites in a football or baseball stadium. The New York Times reports on companies’ calculus: Does a lower corporate tax rate of 21 percent, down from 35 percent, offset the higher cost of entertainment? Will professional sporting event attendance take a hit?
On the horizon: New tax form filing—and confusion—for many nonprofits. McClatchy reports on the new TCJA requirement that nonprofits and charities—including churches—pay a 21 percent tax on the value of employee benefits like parking spaces and public transit passes. But will the tax apply to other benefits? Treasury has not yet provided official guidance. As nonprofits wait, they’re gearing up to file some tax forms for the first time. It won’t be easy, and may not be cheap.
If you tax it, how much will you collect? The city of Irondale, Alabama, has a $2.1 million budget shortfall. In May, its city council approved a 1 percent occupational tax on everybody who works in the city’s 596 companies, non-profits, and schools. The council expects the tax to fill the budget gap, but Mayor Charles Moore says “We have no good way to know that. We don't know what all of the companies' payrolls are. That information is not made public.” Irondale’s budget deficit resulted in large part from the closure of Sam’s Club, which had generated $1.4 million a year in sales taxes, property taxes, and business license fees.
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