Despite nearly a decade of economic growth, last fiscal year’s federal deficit was almost $1 trillion. That’s the highest since 2012, and at $984 billion, 25 percent more than last year. As a share of the economy, the deficit nearly doubled since 2015 to 4.6 percent. Spending increases for Social Security and Medicare, two recent bipartisan spending deals, and the Tax Cuts and Jobs Act all have contributed to the increase. Net interest on the nation’s debt has reached $376 billion—more than the cost of any other federal programs except for the military, Medicare, and Social Security.
Without an end-of-year spending deal, what’s to become of tax extenders? Bloomberg Tax reports on the collection of temporary tax breaks knowns as “extenders.” If Congress approves another short-term spending deal to replace the one that expires November 21, many extenders will have been gone for over two years. It would be hard for the IRS to administer claims for retroactive tax breaks. And restoring subsides that have been off the books for two years makes little sense economically. Will today’s economy benefit if companies and individuals get tax benefits for activity that took place in 2018?
House Democrats would increase the estate tax. The “For the 99.8% Act” would tax estates with progressive rates. Estates between $3.5 million and $10 million would be taxed at 45 percent. Estates greater than $1 billion would be taxed at 77 percent. Current law exempts from tax the first $11.4 million in assets and any excess at 40 percent.
How can Elizabeth Warren find $32 trillion to pay for her health care plan? TPC’s Howard Gleckman explains the presidential candidate’s two problems: (1) the cost of the Medicare for All plan she has endorsed and (2) her self-imposed financing constraints. Gleckman concludes that “She will have little choice but to scale back her health care ambitions, cut other spending, borrow the money, or find new—and controversial--sources of revenue.”
India may offer some tax relief and ditch some tax breaks. The Indian government wants to boost economic growth and consumer demand. Bloomberg Tax reports (paywall) it is considering a plan to raise taxable income thresholds while eliminating some tax breaks, including one on rent payments and earned interest.
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- © Urban Institute, Brookings Institution, and individual authors, 2016.