The President released his election-year budget. President Trump released his $4.8 trillion budget plan yesterday. It assumes the Tax Cuts and Jobs Act’s individual income tax provisions will be extended through 2035, instead of expiring as scheduled in 2025. The budget estimates the cost of extending the provisions would be $1.4 trillion but TPC has estimated it would top $3 trillion over 10 years. The new budget projects this year’s $1 trillion deficit will fall to $261 billion in 2030 and reach balance by 2035. There is no chance Congress will enact this combination of deep spending cuts and tax increases.
The return of Rosy Scenario. The forecast assumes the economy will grow at an average of 2.9 percent over the next decade, 50 percent faster than the consensus of 2.0 percent and assumes that interest rates will remain historically low. The White House budget proposes $4.4 trillion in spending reductions over the next decade, about half coming from changes to social safety net programs. It includes non-defense spending of $590 billion and defense spending of $740.5 billion. The budget includes $3.5 trillion in spending on Social Security, Medicare and other entitlements.
A budget bump for the IRS. Trump is proposing a 4.3 percent budget increase for the IRS, to about $12 billion. Most of the extra $500 million would go to information technology
Too SALTy or not? Despite recent published reports, TPC’s Lucy Dadayan and Noah Zwiefel say it is not possible to know whether the Tax Cuts and Jobs Act’s $10,000 cap on the state and local tax (SALT) deduction caused a migration from high-tax states to low-tax states. About half of all states suffered a net loss of tax filers in recent years. But this trend was occurring well before the TCJA and it’s too soon to tell if the SALT cap is driving people to other states. We do know that a combination of factors such as job opportunities, retirement, and lifestyle drive migration.
San Jose, California, voters favor a property transfer tax to fight homelessness. A new public opinion survey shows that 55 percent of San Jose voters back a real estate transfer tax on properties worth more than $2 million. The initiative will be on a March ballot. It would affect fewer than five percent of properties, most of which would be commercial or industrial.
In Wisconsin: Republican state lawmakers propose farmers’ tax relief. Given the state’s current tax surplus, GOP lawmakers want give each farmer a $7,500 tax credit. They do not know, however, how much their plans would cost. Democratic Governor Tony Evers has already called on lawmakers to take up his $8.5 million plan to increase agriculture exports.
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 firstname.lastname@example.org.
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.