More evidence that the TCJA failed to generate business investment. The New York Times reports on its analysis of data compiled by Capital IQ. After the Tax Cuts and Jobs Act (TCJA) reduced the corporate income tax rate from 35 percent to 21 percent, there was “no statistically meaningful relationship between the size of the tax cut that companies and industries received and the investments they made.” The Times finds that on average, companies with the biggest tax cuts increased their capital investment by less than companies with smaller tax cuts.
What would happen if investments by the rich face a wealth tax and a big increase in capital gains taxes? The Wall Street Journal says that tax increases on the wealthy proposed by Democratic presidential hopeful Elizabeth Warren could reduce their savings and investment. Federal tax rates on some billionaires and multimillionaires could exceed 100 percent under Sen. Warren’s proposals. “Under which circumstances would taxpayers have to pay those rates? How might that change their behavior? And would investment and economic growth suffer?”
A floating Opportunity Zone in Florida. ProPublica reports that two wealthy donors to Florida Governor Rick Scott won Opportunity Zone designation for Marina Village in West Palm Beach, a short drive from President Trump’s Mar-A-Lago resort. The marina is the site of planned luxury apartment towers and “superyachts,” floating mansions that will cost over $100 million. Florida had not originally designated the marina’s census tract for the Opportunity Zone program since unemployment and poverty rates did not qualify. Plans changed after an aggressive lobbying campaign. Scott also greenlit an OZ designation for a wealthy area of downtown Tampa, also at the request of a big donor.
Democratic sens. Elizabeth Warren and Sherrod Brown say IRS is ignoring problems with its Free File program. In their letter to IRS Commissioner Charles Rettig, the Democratic lawmakers say the IRS-commissioned review of Free File conducted by the MITRE Corporation and released last month was “irredeemably flawed.” They want to know how the IRS chose MITRE to review Free File and why MITRE described the IRS focus on the program as “less about target number of participants, and more about maximizing awareness to ensure people recognize it is a choice.”
For the latest tax news, subscribe to the Tax Policy Center’s Daily Deduction. Sign up here to have it delivered to your inbox weekdays at 8:00 am (Mondays only when Congress is in recess). We welcome tips on new research or other news. Email Renu Zaretsky at email@example.com.
Posts and comments are solely the opinion of the author and not that of the Tax Policy Center, Urban Institute, or Brookings Institution.
- © Urban Institute, Brookings Institution, and individual authors, 2020.