The deficit climbed to $782 billion in fiscal year 2018, or 3.9 percent of GDP. The Congressional Budget Office explains that the deficit would have reached $826 billion, or 4.1 percent of Gross Domestic Product, if not for some unusual timing issues. In fiscal year 2017 the deficit was 2.4 percent of GDP. The Tax Cuts and Jobs Act and a bipartisan spending bill were responsible for most of the increase.
The federal gas tax rate is 25 years old. Congress increased the tax to its current 18.4 cents per gallon on October 1, 1993. At that time, gasoline prices averaged about $1.11 a gallon. Now they are about $3 and everything has gotten more expensive since. To pay for their own infrastructure needs in the absence of a federal rate increase, more than half of states have raised their own fuel taxes over the past five years.
And California voters may throw its rate hike in reverse. Will California voters roll back the state’s year-old 12-cent gas tax increase? GOP gubernatorial candidate John Cox—who wants to reduce taxes and regulations—led an effort to put the issue on the ballot. Democratic candidate Gavin Newsom supports last year’s increase, saying repeal would end road construction and threaten related jobs.
Taxing the ivory tower? Massachusetts Democratic gubernatorial candidate Jay Gonzales wants to levy a new tax on private colleges with large endowments to raise revenue for public transportation, reports The Wall Street Journal (paywall). Nonprofit and largely tax-exempt schools with endowments exceeding $1 billion would pay a 1.6 percent annual tax on their investment income. The state would raise nearly $1 billion from the levy, with $563 million coming from Harvard University and $210 million from the Massachusetts Institute of Technology alone.
A reality television star heads to prison for tax evasion. This one is named Mike “The Situation” Sorrentino. He’s going to prison for eight months for evading taxes he owed for 2011 by activities such as making cash deposits of under $10,000 in order to avoid IRS attention. He’ll also have to pay $124,000 in restitution and a $10,000 fine. In a news release, Principal Deputy Assistant Attorney General Richard Zuckerman said, “Lying to and defrauding the federal government is a very serious crime, regardless of a defendant’s celebrity status.”
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