Can the Sanders financial transactions tax raise trillions and cut speculation? TPC’s Howard Gleckman looks at Senator and Democratic presidential hopeful Bernie Sanders’s (I-VT) $2.4 trillion financial transactions tax (FTT). Sanders says the FTT would finance his plan for the federal government to pay off existing college debt and make future public college education free. Would it raise the revenue Sanders thinks it will? What would the FTT accomplish and who ultimately would pay it? While the FTT has merits, it likely would significantly reduce taxable trading. Thus, the levy may not raise enough money to pay for Sanders’ ambitious education plan.
The House Ways & Means goes to court to get Trump’s tax returns. TPC’s Steve Rosenthal concludes that Treasury Secretary Steven Mnuchin’s argument that Congress lacks legislative purpose in seeking the returns is weak. Says Steve, “Even Mnuchin agrees the committee can legitimately investigate whether the IRS is fully and appropriately auditing the president. And, to me, requesting Trump tax returns that were open for audit at the time he took office… is a sensible way for Congress to determine whether the IRS is auditing Trump appropriately.” The case was assigned to district court judge Trevor McFadden, who was appointed by Trump and who ruled in an earlier case that Congress did not have standing to sue to prevent Trump from shifting funds to build his Mexican border wall without congressional approval.
The Economic Security Project proposes a simpler, bigger tax credit for low-income workers and caregivers. TPC’s Elaine Maag analyzes the Cost-of-Living Refund, the latest plan to expand the Earned Income Tax Credit. Proposed by the Economic Security Project and embraced by Senator and presidential hopeful Cory Booker (D-NJ), the CLR “would build on the success of the EITC but offer a much larger subsidy for workers without children at home and would simplify tax filing for many. It would also expand the eligible population to some low-income students and caregivers.”
Rhode Island now has a SALT workaround for pass-through businesses. Democratic Governor Gina Raimondo signed the state budget that includes a new 5.99 percent tax on pass-through entities that can be offset by a corresponding state tax credit. This allows owners of these businesses to partially circumvent the Tax Cuts and Jobs Act’s $10,000 cap on state and local tax deductions. The revenue-neutral provision is modeled after similar legislation in Connecticut but it is not clear whether the US Treasury will allow the measure.
Pennsylvania had historically high tax collections. In the fiscal year that ended on June 30, the state collected $1 billion more in taxes than it anticipated. Lawmakers deposited $317 million into the rainy day fund and will spend the rest on new initiatives and to expand some existing programs. The windfall came from the effects of the Tax Cuts and Jobs Act and the Supreme Court’s Wayfair decision that increased collections of sales tax on online commerce.
Could state gas taxes go higher, faster? The Tax Hound looks at the challenges states face when trying to raise money for infrastructure. In Michigan, for example, lawmakers are debating the governor’s proposal to raise the state gasoline tax from 26 cents per gallon to 71 cents. Could drivers afford such steep tax hikes? Would higher motor fuel taxes hurt a state’s economy? Are there viable revenue alternatives? One thing is certain: The road to higher gas taxes is always bumpy.
India plans to lower its corporate tax rate. Finance Minister Nirmala Sitharaman announced that the government will cut the corporate rate from 30 percent to 25 percent for Indian firms with annual revenues lower than $58,000. She says that covers 99.3 percent of India’s companies. Foreign companies that set up manufacturing plants for advanced technology also would receive tax exemptions and benefits.
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- © Urban Institute, Brookings Institution, and individual authors, 2016.