General Motors prepares for the worst. The automaker announced yesterday that it will lay off 14,700 factory and white-collar workers in North America. That’s 15 percent of its 54,000 salaried employees including one-quarter of its global executives, 8,000 factory jobs, plus voluntary buyouts. GM will close five plants in Maryland, Michigan, Ohio, and Canada by the end of 2019. GM is reportedly preparing for the next economic downturn, shifting trade agreements under the Trump administration, and potential tariffs on imported automobiles.
As for other companies, credit where credit is due? A new National Bureau of Economic Research paper by Michelle Hanlon, Jeffrey Hoopes, and Joel Slemrod finds that only about 4 percent of public companies say they will distribute some of the benefit of the Tax Cuts and Jobs Act to their workers, while about 22 percent of large firms announced they would increase investment. While a large number of firms planned stock buybacks, the share repurchases were highly concentrated among a relatively few public companies. The study found that the firms with the largest tax savings were most likely to announce payments to workers or plans for more investment. Interestingly, businesses that contributed more money to Republican candidates were also more likely to announce benefits to employees.
Detroit makes it easier for low-income homeowners to get a tax exemption… sort of. The Detroit City Council approved a measure last week to make it easier for low-income residents to get a “poverty tax exemption” under its Homeowners Property Tax Assistance Program. A resident can apply for a 100 percent exemption if she makes $16,600 a year or less. To reduce fraud, the council included a clause that requires most applications be notarized. In 2017, an estimated 35,000 owner-occupied households qualified for the 100 percent exemption, and 4,220 qualified for partial exemption. But only about 5,500 people applied and 5,200 received some amount of tax relief.
Will marijuana tax revenue be worth it in Boston? The city likely will see its first pot shops open in 2019 but Mayor Marty Walsh, a staunch opponent of legal recreational marijuana since it was on the state ballot in 2016, says “I hope the taxation is worth the human toll.” Retailers will have to collect a 10.75 percent state excise tax, 6.25 percent state sales tax, and up to a 3 percent local tax. Last week, Boston reached its first agreement with a retailer that now must seek a Zoning Board of Appeals approval for a store and then a state OK.
In Ohio, you’ll be able to pay taxes with bitcoin. The Wall Street Journal reports (paywall) that Ohio will be the first state to accept the cryptocurrency for payment of tax bills. Ohio businesses will be able to register on OhioCrypto.com and pay for everything from cigarette sales taxes to employee withholding taxes. Soon, individual filers will also be able to use bitcoin to pay tax bills.
It’s Giving Tuesday. Thinking of contributing? The number of taxpayers who will claim a charitable deduction will decline in the post-TCJA world. At a recent event hosted by TPC and Independent Sector, national experts in tax policy and charitable giving considered what this change will mean for charitable giving and the nonprofit sector. A TPC brief reviews their discussion and shares principles that should guide tax policies affecting the nonprofit sector.
Speaking of giving… consider TPC. Support helps TPC provide policymakers and practitioners with nonpartisan research and evidence to help shape smart tax policy decisions. Thank you for your continued interest in TPC’s work and mission.
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