The House has reached a tax and spending deal. The tax deal would delay the Affordable Care Act’s 40 percent tax on high-cost healthcare plans and put a two-year moratorium on the medical device tax. The tax deal also locks in a popular the research credit and Section 179 small business expensing. Democrats wanted a five-year extension of tax breaks for wind and solar energy companies, and it’s in the tax deal, too. In return, Republicans got their wish: The $1.1 trillion spending bill lifts a decades-long ban on exporting crude oil from the United States. But the omnibus funding bill lacks many of the GOP’s desired policy amendments. The House and Senate may pass the legislation as soon as tomorrow.
If the deal ultimately passes, could it set the stage for tax reform… in 2017? Both Senate Majority Leader Mitch McConnell and House Speaker Paul Ryan doubt there’s any chance for comprehensive tax reform while President Obama is in office, but claim prospects will be better with a new Administration. Ryan remains optimistic that Congress could explore international tax reform next year.
Massachusetts’ state income tax will drop on New Year’s Day. It’s set to fall by one half of a percentage point to 5.1 percent. The rate was 5.95 percent in 1999, but voters approved economic benchmarks that triggered annual reductions. If the state continues to meet its benchmarks, the rate will fall to 5 percent in two years.
In the United Kingdom, Starbucks has a heavier tax bill. The coffee chain also posted record profits in Britain. It paid £8 million (or $12 million) in corporate taxes in 2014. That’s a big jump from previous years. In fact, it’s only a little less than the £8.6 million it paid in taxes over 14 years, between 1998 and 2012. Profits grew, but so did controversy and scrutiny.
Oh, about last night’s debate… Maybe they didn’t talk about tax policy, given the current attention to international and security concerns, but there are good reasons to pay attention to candidates’ tax proposals. Urban Institute visiting fellow Harvey Galper explains why.
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.