NAFTA 2.0, or “USMCA,” reached among North American countries. Canada, Mexico, and the United States have struck a revised North American Free Trade Agreement, which President Trump calls United States-Mexico-Canada Agreement. Beginning in 2020, the trilateral deal would allow US automakers to avoid tariffs on most cars they build and import from Canada and Mexico, though 75 percent of a vehicle’s components would have to be manufactured in North America. The United States’ steel tariffs are still in place but Trump says he’ll negotiate them separately. Canada would open up its dairy market, at least a bit, to US products. Congress must ratify the trade agreement in 2019. Will it?
More time to figure out the repatriation tax. Treasury and IRS are giving US-based multinationals more time to figure the basis for the one-time tax on untaxed foreign earnings. The deadline for some companies was next week, but the guidance gives firms up to 90 days after the final regulations are published.
Do we really need another tax-preferred savings vehicle? TPC’s Howard Gleckman considers the House-passed “Family Savings Act of 2018.” Will yet one more tax-preferred savings vehicle encourage many more people to put money aside? Probably not. Will it benefit all taxpayers equally? Nope.
In Georgia: Gubernatorial tax talk. Democratic candidate Stacy Abrams initially said she’d try to reverse the state legislature’s decision to cut top state income tax rates. Now she says that if elected, she won’t stand in the tax cut’s way. The legislature acted after the Tax Cuts and Jobs Act indirectly increased state taxes for many Georgia households. Those taxpayers are now more likely to use the increased federal standard deduction rather than itemize, which blocks them from itemizing on their state returns.
More of the same between Michigan’s candidates for governor. Republican Attorney General Bill Schuette promises to reduce the state’s flat income tax rate of 4.25 percent to 3.9 percent, but has not specified where he’d reduce spending to offset the revenue loss.Democratic candidate Gretchen Whitmer wants to get rid of the state’s tax on pension income and is open to raising the state’s fuel tax. She has spending initiatives as well but has not said how’d she pay for them.
The IRS isn’t chasing tax evaders like it used to. It can’t, and that’s a problem. The New York Times reports on a troubling trend. The IRS is pursuing fewer cases of tax fraud than it did 10 years ago. The agency’s criminal division brought 795 cases last years, almost 25 percent less than it did in 2010. Moreover, because of budget cuts — which began in 2011 and have not abated — the IRS audit rate has fallen 42 percent.
Charles Rettig is sworn in as IRS commissioner. Rettig, a long-time California tax lawyer, took the agency’s reins yesterday. But he’s got a lot to do. Asked whether he thought Rettig would make a good commissioner, one long time agency staffer said, “Unless we get more resources, it doesn’t matter what he does.”
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