How hard will it be for Donald Trump to overhaul the tax code? Says TPC’s Len Burman: “I think everybody assumes a Republican Congress and President Trump can get a business tax plan passed but aside from just cutting rates, there’s a lot of disagreement.” The Washington Post presents five of Trump’s biggest obstacles: (1) Cutting rates without increasing the deficit; (2) Selling a plan that will help the super-rich; (3) Finding a way to tax international businesses; (4) Getting Democrats on board; and (5) Persuading the business lobby to sign on.
The waiting is the hardest part. TPC’s Elaine Maag laments the wait in store for cash-limited families expecting Earned Income Tax Credit and Child Tax Credit refunds next year. In what it says is an effort to prevent fraud, Congress now requires the IRS to delay all refunds containing an EITC or additional CTC until at least February 15. The delay may harm already vulnerable families but is unlikely to improve program administration.
Things don’t look so great for state revenue next year. Although the national economy is relatively strong, TPC’s Norton Francis finds that about half of US states failed to meet revenue targets last year and half already have revised their current year’s targets. Norton explains why revenue forecasts are especially uncertain. For one thing, taxpayers already may be adjusting their behavior in anticipation of coming federal tax cuts under President-elect Trump and a GOP Congress.
In Nebraska, Amazon will begin collecting online sales taxes. The effort could add tens of millions in new tax dollars to Nebraska’s coffers. It’s a big deal, says the state tax commissioner, because only about 1 percent of Nebraskans have been reporting their online purchases and paying their sales tax to the state.
Not nice, but naughty, tax-policy-wise. TPC’s Howard Gleckman runs down the worst tax ideas of 2016. Presidential election years always offer a bonanza of choices—but TPC whittled this year’s down to ten terrible ideas, each worthy of the annual TPC Lump of Coal.
Speaking of naughty, maybe… Google told Dutch regulators that it reduced its global tax bill by $3.6 billion in 2015 by moving $15.5 billion in profits to a Bermuda shell company, reports Bloomberg. Google uses the practice, known as a Dutch sandwich, to shift non-US income to the Netherlands and then on to the tax haven of Bermuda. The firm sharply expanded the practice 2015 in the face of growing pressure from the European Union to increase its tax payments.
Congress is in recess. The Daily Deduction will return on Tuesday, January 3, 2017.
Interested in subscribing to the Daily Deduction, the Urban-Brookings Tax Policy Center summary of the day’s tax news? Sign-up here to get the Daily Deduction delivered to your inbox every morning. If you’d like to tell us about a new research paper or have any comments about our feature, write us at dailydeduction “at” taxpolicycenter “dot” org.
Posts and comments are solely the opinion of the author and not that of the Tax Policy Center, Urban Institute, or Brookings Institution.
- © Urban Institute, Brookings Institution, and individual authors, 2016.