Tax Cuts 2.0 in 2020? “Everything is awesome,” so why not? Treasury Secretary Steven Mnuchin told reporters yesterday that the Trump Administration might propose new tax cuts next year. He also touted the strength of the US economy though business investment and employment growth appear to be slowing. “There’s no question the US economy is in very good shape. As we look around the world, there’s no question that China is slowing, Europe is slowing — the US is the bright spot of the world… we’ll be looking at tax cuts 2.0, something that will be something we’ll consider next year.” Mnuchin appeared to be contradicting the president who, in August, promised a middle-class tax cut—but not until 2021.
Mnuchin also talks about the French digital tax. The Treasury Secretary says he is meeting with a “bunch” of US tech firms this week and with other US-based multinationals next week to try to reach a consensus position on the French digital tax. The Trump Administration and many in Congress oppose the French levy. Mnuchin says he hopes the two countries can reach an “understanding” by December.
Extenders Extensions, Again? Bloomberg Tax notes that Congress will be try again this fall to pass a tax package that could include reviving temporary tax breaks known as extenders as well as the House-passed (H.R. 1994) bill to enhance some retirement tax incentives. That measure has been stalled in the Senate in disputes over unrelated issues.
What would a wealth tax mean for inequality in the US? Emmanuel Saez and Gabriel Zucman of the University of California at Berkeley have published a new paper that estimates the effects of a wealth tax on the assets of the very rich. They estimate between $9 trillion and $13 trillion dollars in wealth would be subject to the tax, which they’d apply to individual household assets in excess of $1 billion. According to their estimates, had a 3 percent tax on such assets been in place since 1982, the total share of wealth owned by the 400 richest Americans would have declined from about 3.5 percent to about 2 percent by 2018. A more radical wealth tax, with a 10 percent marginal tax rate above $1 billion, would have reduced their share to about 1 percent. Democratic presidential hopeful Elizabeth Warren has proposed a version of their levy.
Uh-Oh: Utah Poll finds people don’t want a gas tax increase or toll roads. Drivers currently pay a 30-cent-per gallon gasoline tax, and the majority don’t want that rate to climb. Nor do they want new tolls on major highways. Problem is, the state is not collecting sufficient revenue from the current tax to meet its infrastructure needs. It has earmarked $644 million in annual sales tax revenues for transportation but the state has budgeted $1.7 billion. A higher gas tax and new tolls may be the only revenue options left. Only 36 percent of Utahns would raise gas taxes to maintain funding for road construction and maintenance.
$15 trillion in foreign direct investment is tax avoidance, says the IMF. A new study from the International Monetary Fund finds that of $40 trillion in FDI by multinational firms in 2017, more than one-third was phantom investment, held by shell companies to avoid taxes. The amount doubled since 2009.
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