Have shutdown negotiations hit a wall? Senate Majority Leader Mitch McConnell blocked House bills to reopen the government yesterday, saying that he and Minority Leader Chuck Schumer had agreed to not hold “show votes.” He said he would not advance any bill to the floor without President Trump’s support. However, a group of Senate Republicans reportedly is working to find a way to end the shutdown—and put off the wall debate to another time.
Is this an emergency? Meanwhile, President Trump said he “wouldn’t be surprised” if he called a national emergency to build a border wall if Congress does not OK the project. Such a step would surely end up in court, though it could also be a way to reopen the government.
The economic effects of the shutdown. Fed Chairman Jerome Powell said yesterday that an extended shutdown would have an adverse economic impact: “I do think that would show up in the data very clearly.” Politico reports that S&P Global Ratings estimates that the partial government closure will lower real GDP growth by 0.1 percent every two weeks, or about $1.2 billion per week. Today, federal employees who are furloughed or working without pay will miss their first paychecks.
Filling slots on the Ways & Means Committee. House Democrats named ten new members of the Ways & Means panel: Gwen Moore of Wisconsin, Daniel Kildee of Michigan, Brendan Boyle of Pennsylvania, Don Beyer of Virginia, Dwight Evans of Pennsylvania, Thomas Suozzi of New York, Jimmy Panetta of California, Stephanie Murphy of Florida, Bradley Scott Schneider of Illinois, and Steven Horsford of Nevada.
One tax the Chamber of Commerce likes. The group, which reflexively opposes nearly all tax hikes, backs an increase in the gas tax to fund infrastructure. And yesterday, the Chamber predicted such a tax hike could pass Congress.
States can tax sports betting in 2019. But they won’t hit a fiscal jackpot. TPC’s Richard Auxier offers a “sports gambling tip sheet,” explaining how states approach gambling and how, if they offer it, they tax it. He concludes: “Sports gambling will bring in a few extra dollars to the state but it won’t fund large amounts of education or infrastructure.”
Michigan lawmaker moves to repeal the state’s income tax on pensions. Rep. Joe Bellino has introduced a bill that would end the tax on pension incomes as of December 31, 2018. It would also simplify taxes for retirees. The current tax on pension income generates $300 million in tax revenue annually.
Nike didn’t just do it? The European Commission is investigating whether the shoe manufacturer’s tax deals with the Netherlands amount to illegal state aid. Depending on the outcome, Nike might have to repay millions of euros in taxes for sales recorded by Nike’s Netherlands subsidiaries but made in Europe, the Middle East, and Africa.
January 29 at TPC: How Are States Responding to the TCJA? TPC, the American Tax Policy Institute, Tulane University, and the University of Tennessee host a conference to examine state responses to the 2017 tax cut. Topics will include conformity of state and federal individual and business tax bases, international business as a source of state revenue, and state workarounds to the TCJA’s limit on the deduction for state and local income taxes. Register here for the day-long event. The event will be webcast here beginning at 9:30 am.
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- © Urban Institute, Brookings Institution, and individual authors, 2016.