Will tax reform be bipartisan? Forty-five of the Senate’s 48 Democrats sent a letter to the GOP leadership offering to work together on a tax bill. But the Dems had preconditions, including that the bill be revenue neutral and that it cut taxes for middle-income households but not for the wealthy. TPC’s Howard Gleckman explains why it would be almost impossible for Republicans to meet these requests, even if they were so inclined. The three senators who did not sign the letter (Joe Donnelly of Indiana, Joe Manchin of West Virginia, and Heidi Heitkamp of North Dakota) are running for reelection in 2018 in states that supported President Trump.
Or, will we just see a lot of lobbying for tax cuts? House Speaker Paul Ryan shared his personal support via Twitter for the American Action Network’s Middle Class Growth Initiative. That’s a $5 million August lobbying campaign supporting tax cuts for the middle class and small businesses.
Debt limit talks stall. The Washington Post reports that initial talks between the Trump Administration and top Senate leaders went nowhere. Treasury Secretary Steven Mnuchin, Majority Leader Mitch McConnell, and Democratic Leader Chuck Schumer made no progress, the Post reports, boosting the odds for a last-minute showdown just before the US reaches its borrowing limit at the end of September. Could it be any other way?
Massachusetts retailers want to put a sales tax cut on the state’s November 2018 ballot. The Retailers Association of Massachusetts will file ballot initiative petitions to cut the state’s 6.25 percent sales tax. The group will talk to its members this month to determine which of four specific issues around which to campaign. The alternatives include reducing the sales tax: (1) to 4.5 percent, (2) to 5 percent, (3) to 4.5 percent and establishing a permanent two-day sales tax holiday in August, or (4) to 5 percent and establishing an annual two-day sales tax holiday in August.
Wisconsin’s deal with Foxconn raises three policymaking questions. TPC’s Megan Randall considers the mega deal, which promoters say would bring 13,000 jobs and $10 billion in capital investment to Wisconsin. In return, Foxconn would receive $200 million to $250 million per year in public incentives, costing the state an average of $15,000 to $19,000 per job annually. Policymakers should ask: How likely is it that the deal to bring these results? What would happen without the incentives? Is competition between states making the nation worse off?
Are there linkages between a carbon tax and the EITC? American Enterprise Institute’s Aparna Mathur and TPC's Adele Morris have a new brief on the question. In principle, a carbon tax that lowers wages could reduce EITC benefits and thus hurt low-to-moderate income households. But Mathur and Morris find the likely magnitude of the effects would be very small. They conclude that “far more important to the distribution of burden is the extent to which the carbon tax passes through to raise retail prices, a decidedly regressive outcome, versus lowering wages, which is distributionally much more neutral.”
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