The President’s Budget goes big. The Trump Administration released its $4.7 trillion budget yesterday. It would cut Medicare by $845 billion, Medicaid by $241 billion, and slash the budgets for the Environmental Protection Agency and departments of State, Transportation, and Interior. It would boost military spending by nearly 5 percent, and spend $8.6 billion for a southern border wall. It forecasts at least $1 trillion deficits through 2022. The budget would not balance for 15 years even though the White House predicts economic growth will reach or exceed 3 percent annually through 2024 and at least 2.8 percent for the following five years—far better than most private economists forecast.
The IRS budget. The White House would give the IRS $11.5 billion, with some additional funding for tax enforcement and $290 million for multiyear IT modernization.
On the Hill today. The House Ways & Means Committee’s subcommittee on Select Revenue Measures meets today for a hearing on temporary policy in the Internal Revenue Code, also known as tax extenders.
How might Colorado change tax policy? The General Assembly will consider a package of legislation to dramatically change Colorado’s fiscal landscape. The bills would 1) repeal the “Gallagher Amendment” that limits the share of property tax revenue from residential properties to 45 percent; 2) end the TABOR (Taxpayers Bill of Rights) refund that requires Colorado to return to taxpayers revenues that exceed the state’s budgeted spending; and 3) ensure a consistent property tax rate across all school districts.
The Ohio House backs a gas tax hike. Governor Mike DeWine proposed raising the state’s tax on fuel from 28-cents-per-gallon to 46 cents. He’d use the $1.2 billion for the state’s transportation budget. The House has approved increases of 10.7 cents over two years on gasoline and 20 cents per gallon on diesel. By also adding natural gas to the list of taxable motor fuels and a registration fee for electric vehicles, the House plan would raise $872 million. The Senate still must consider a transportation budget.
Speaking of state tax revenues… In TPC’s State Tax and Economic Review for the third quarter of 2018, Lucy Dadayan reports that state tax revenues have fluctuated wildly over the past year in the wake of the Tax Cuts and Jobs Act. Revenue growth was strong in the third quarter of 2018 but weaker than in the final quarter of 2017 and the first half of 2018. Preliminary data for the final quarter of 2018 show declines in income tax collections, suggesting that states need to be cautious in fiscal years 2019 and 2020.
Indonesia wants to change its car taxes. The nation’s finance minister says that the government plans to base its tax on fuel consumption and emissions instead of engine capacity. It would levy an 8 percent luxury tax on cars using renewable fuel, charge no taxes on electric vehicles, and reduce taxes on hybrid cars. The maximum tax will be 70 percent. Indonesia currently taxes vehicles at rates between 0 percent and 125 percent depending on engine capacity, car size, fuel used, and drivetrain (two- or four-wheel drive).
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