What would “DBCFT” do? The New York Times Upshot takes a look at the House Republicans’ proposed “destination-based cash flow tax with border adjustment.” Alan Auerbach of the University of California at Berkeley notes that measuring income is a key challenge with a corporate income tax “but with cash flow you just follow the money.” But what will happen to the value of the dollar overseas? As the Times concludes, “disruptions and costs could arrive almost instantly.” To help track it all, take a look at these brief descriptions of the various ways to tax international transactions, courtesy of TPC’s Eric Toder.
Michigan considers dropping its state income tax. A GOP state senator will unveil an ambitious plan to eliminate the 4.25 percent levy on income and raise the state’s 6 percent sales tax. The state income tax generated over $9.3 billion in the 2016 fiscal year and is Michigan’s largest single source of revenue. Republican Governor Rick Snyder has rejected an immediate income tax repeal given the state’s budgetary constraints. A rate roll-back could, however, see the light of the day.
Maine Governor LePage wants to slash spending and cut the income tax. The Republican wants to cut state welfare programs, eliminate 500 state jobs, increase the state sales tax and reduce the state income tax. By 2020, he wants a flat income tax of 5.75 percent. That would include a 3 percent education funding surcharge for Mainers earning $200,000 a year approved by voters last fall.
Iowa lawmakers eye tax cuts, too. It’s been 20 years since the state has seen a tax cut. Republicans have regained control of the legislature and want tax relief and simplification. Iowa’s personal income tax features nine brackets that range from 0.36 percent to 8.98 percent. GOP Governor Terry Branstad won’t include an income tax cut in his 2017 legislative agenda and says he’d support only fiscally responsible and sustainable tax changes. However, Branstad may not be in be in Des Moines much longer. President-elect Trump wants to name him ambassador to China.
Meanwhile, Ohio’s December tax revenue again fell short of projections. For the fifth consecutive month, state tax receipts fell short of state estimates, this time by $37 million, or 2 percent. Non-auto sales taxes barely exceeded expectations for the first time since the fiscal year began last July. Ohio already revised downward its revenue estimates by $280 million at the start of the budget year.
Ways & Means has a new tax policy subcommittee chair. Rep. Peter Roskam of Illinois will succeed Rep. Charles Boustany of Louisiana. Rep. Vern Buchanan of Florida take Roskam’s place chairing the panel’s oversight subcommittee. Rep. Pat Tiberi of Ohio will chair the health subcommittee.
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