The day the music died. TPC’s Howard Gleckman wonders whether the concessions announced this week by Ways & Means Chair Kevin Brady signal the death of tax reform. Brady said he’d water down ambitious proposals for a border adjusted tax and a curb on business interest deductions. Tax cuts may still be on the table but reform is on life support.
Could Congress replace the Affordable Care Act’s individual mandate with something better? TPC’s Gene Steuerle thinks it might be a matter of making some existing tax benefits conditional upon buying health insurance. This could be a “bipartisan way to expand coverage, save government costs, and improve tax administration…of course, [it would also require] a subsidy system for those with too little income to afford insurance.”
Three tax policy lessons from Kansas. TPC’s Bill Gale outlines them. In a nutshell: Tax cuts do not guarantee economic growth. Special tax rates for business activity do more to increase tax-sheltering behavior than generate revenue. People are more willing to pay higher taxes when they can connect tax revenues to societal government-provided benefits. Bottom line, says Gale: “These supply-side tax cuts and the new proposals by the Republican leaders may now be the leading examples of what not to do to enhance economic prosperity.”
Massachusetts considers major changes to its tax on recreational marijuana. The chairman of the legislature’s Marijuana Policy Committee drafted a bill that would tax recreational marijuana products at rates as high as 28 percent. Now, those products face a 12 percent total tax, including a 3.75 percent marijuana excise tax, a 6.25 percent state sales tax and a 2 percent local option tax. The new bill would raise the excise tax to 16.75 percent and give communities the power to levy a 5 percent local tax.
Philadelphia’s soda tax has not fallen flat in the courts. An appeals court upheld the city’s 1.5-cent-per-ounce tax on sweetened beverages. Restaurants, beverage distributors, and other industry stakeholders had sued Philadelphia, claiming that the city was duplicating Pennsylvania’s state sales tax. But the court backed a city judge’s decision that the beverage tax does not affect the same subject or people as the state’s sales tax. The plaintiffs will appeal.
Saudi Arabia has a new sin tax. The nation wants to raise money and help reduce the country’s dependence on its oil sales. The tax would nearly double the price of a pack of cigarettes from, as the Times of London reports, £2.50 to £5.
On the Hill. The House passed legislation to block undocumented immigrants from accessing tax credits for health insurance premiums. The bill would require Treasury to confirm that those applying for tax credits are verified US citizens or legal residents. The main way to confirm legal status would be through Social Security numbers.
Interested in subscribing to the Daily Deduction, the Urban-Brookings Tax Policy Center summary of the day’s tax news? Sign-up here to get the Daily Deduction delivered to your inbox every morning. If you’d like to tell us about a new research paper or have any comments about our feature, email us.
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, 2016.