On the Hill this week: House Republicans will choose either Paul Ryan or Kevin Brady to be the next Ways & Means Committee chair. But Ryan would have to give up the gavel if he chooses to run for president, according to a new party rule approved last week. Meanwhile, senior tax writing committee members and House and Senate leadership will continue to negotiate over dozens of expired tax breaks. IRS Commissioner John Koskinen strongly urges Congress to settle the issue this month to avoid filing season delays. Finally, the Senate Finance Committee holds a hearing tomorrow on tax relief after a natural disaster.
Will Michigan’s gas tax double to pay for road trouble? With no debate and a quick vote, Michigan’s lame-duck Senate voted to raise the state’s gasoline tax over four years to generate at least $1 billion for road repairs. Michigan currently taxes gasoline at 19 cents per gallon. The measure approved with bipartisan support in the GOP-controlled Senate, would tax the wholesale price of gasoline. Based on the current average wholesale price, the effective gas tax paid at the pump would rise to 25 cents in April, 31 cents in 2016, 36 cents in 2017, and 41 cents in 2018. The bill now moves to the House. Republican Governor Rick Snyder strongly backs the road bill.
Wisconsin needs money for roads, too. Now that the election is over, Governor Scott Walker’s Department of Transportation is recommending a hike in taxes and fees to raise an additional $750 million for infrastructure. By combining a new tax at the pump with an additional tax on the wholesale price of gas, Wisconsin’s gas tax would rise 5 cents to 37.9 per gallon. The price of diesel would rise 10 cents per gallon.
The Navajo Nation might tax junk food. The Council of the nation’s largest reservation’ approved a 2 percent sales tax on items such as cookies, chips, and sodas. If signed into law by Navajo Nation President Ben Shelly, the law would raise $1 million annually. Funds would support farmers’ markets, vegetable gardens, and exercise equipment. The Navajo Nation covers 27,000 square miles across the states of Utah, Arizona, and New Mexico, and has few grocery stores. It has an unemployment rate of about 50 percent, high rates of diabetes, and thousands live without electricity.
Can Seattle levy a millionaire’s tax? The Seattle City Council would like Mayor Ed Murray to explore the legality of an excise tax on household or individual earnings over $1 million. Washington State, which has no income tax of its own, prohibits cities from taxing income. But Seattle’s growing income inequality prompts some Council members to press the mayor for a review of the possibility.
Is the medical device excise tax really hurting the industry? The medical device industry spent tens of millions of dollars over the past five years to repeal the 2.3 percent tax, and is “cautiously optimistic” that the new GOP-controlled Congress will dump it. But the Congressional Research Service estimated the tax would reduce jobs and industry output by less than two-tenths of 1 percent, and would be more likely to increase prices than reduce corporate profits. TPC’s Howard Gleckman explains why the tax and the industry get more attention than similar levies targeted at the insurance and pharmaceutical industries.
“I want to say one word to you… Just one word… Data.” Data centers are collecting big tax breaks in at least 19 states. Facebook, for example, just opened a $300 million facility in Iowa, near Google and Microsoft. State officials argue that doing so broadens the tax base and creates well-paying jobs. The Wall Street Journal reports (paywall) that the tax breaks are attractive to data centers, but so are power prices, climate and fiber networks.
Starbucks: Out of the pot and into the fire. Starbucks’ deal with the Netherlands, which allows the firm to lower its tax bill, may be illegal state aid, according to European Union regulators. Tax agreements offered by Luxembourg, Ireland, Malta, Belgium, Cyprus, and Gibraltar, are also under intensified EU scrutiny.
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