CBO: Federal debt held by public on pace to hit unprecedented levels. The Congressional Budget office reports that if current law continues, federal debt will climb from today’s 78 percent of Gross Domestic Product (GDP) to 144 percent by 2049. If Congress extends the individual tax provisions of the Tax Cuts and Jobs Act and does not limit military and domestic appropriations, the public debt would climb to 219 percent of GDP. “The prospect of such large deficits over many years, and the high and rising debt that would result, poses substantial risks for the nation and presents policymakers with significant challenges,” said CBO’s new director Phillip L. Swagel.
Meanwhile, CFOs see economic growth slowing, but no recession next year. Deloitte’s quarterly survey of corporate chief financial officers from North America’s largest companies finds that 75 percent expect the US economy will slow by the end of 2020. But only 15 percent expect an extended decline in economic activity.
Senate panel OKs four tax treaties. Despite opposition from Sen. Rand Paul (R-KY), the Senate Foreign Relations Committee sent to the floor long-delayed tax treaties with Switzerland, Spain, Japan, and Luxembourg. No word when the full Senate will vote.
California legislature votes again to tax those who forego health insurance. Democratic Governor Gavin Newsom is likely to sign the bill. If he does, California would join Massachusetts, New Jersey, Vermont, and Washington, D.C., in penalizing those who choose not to purchase health insurance. The TCJA eliminated the Affordable Care Act’s the federal tax penalty on those without insurance. A number of red states have filed a lawsuit claiming that the ACA’s individual mandate is unconstitutional in the absence of the tax penalty.
How to avoid a carbon tax: Hide? Oregon’s GOP lawmakers abandoned the state capitol to avoid having to vote on House Bill 2020 that would levy a carbon tax. The bill’s opponents say the measure, which would raise prices of gasoline and natural gas, should go before voters, rather than the legislature.
Companies come out ahead, a bit, thanks to Treasury rule. The Wall Street Journal (paywall) takes a closer look at a proposed Treasury rule that would make it easier for multinational companies to avoid paying the TCJA’s minimum tax. The levy was aimed at firms that pay low foreign taxes but also affects companies operating in high-tax countries. The new Treasury guidance lets US-based companies choose to have their subsidiaries excluded from the minimum tax, as long as the subsidiaries pay a tax rate of at least 18.9 percent This would help companies based in countries like Mexico, Germany, France, and Japan but also would reduce expected revenue from the TCJA.
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