Will President Trump’s knock it out of the park with ACA repeal and tax reform in his first 100 days? In a word, nope. The White House wants a House vote to repeal the Affordable Care Act this week, but Speaker Paul Ryan has all but said it won’t happen. Late last week, the President also promised a big announcement about his tax cuts on Wednesday: "Bigger, I believe, than any tax cut ever." Some thought Trump would roll out a plan, but the White House walked that back within hours. By Sunday, Budget Director Mick Mulvaney was telling Fox News the Administration would release only principles and “some indication of what the rates are going to be.” Would the plan be revenue neutral? “I don’t think we have decided that part yet,” Mulvaney said.
Congress may instead try to extend spending bills to keep the government open, but that’s no easy pitch. Congress has until April 28 (day 99 of the Trump presidency) to pass a spending bill to keep the government open (and tax refunds flowing) through September. But will the measure get caught up in the debate over Trump’s promised wall on the Mexican border? Mulvaney says, “The president should, I think, at least have the opportunity to fund one of his highest priorities.” But with hardline conservatives opposed to a funding bill, Trump and the GOP leadership will need Democratic votes keep the government running. And Democrats are not interested in paying for that wall. A very short-term spending bill may be on deck, giving Congress a few more weeks to continue its budget arguments.
If he wants a home run, maybe Trump should focus on business tax cuts. But how? Trump campaign advisers Steve Forbes, Larry Kudlow, Arthur Laffer, and Stephen Moore say Trump and Congress should go for a simple bill that reduces taxes for businesses, includes infrastructure funding, and excludes the House GOP’s border adjustable tax. But Harvard’s Greg Mankiw likes much of what he sees in the House GOP’s “Better Way Plan” for business taxation, including its proposed destination-based tax.
And Congress should watch out for a real estate industry curveball. The New York Times examines the impact of tax changes on the real estate industry, namely its cherished deduction for interest payments. “There’s probably no special interest that’s more favored by the existing tax code than real estate,” said TPC’s Steve Rosenthal. Its lobby is very powerful, as Trump would know—he opposed the 1986 tax reforms that affected the industry. “Trump said he knows where the loopholes are, but so far he hasn’t proposed closing any of them,” Rosenthal says.
Need some grounding work before tax reform? Check out TPC’s prep guide for the 2017 tax debate. And remember, the public is not clamoring for a tax cut, explains TPC’s Howard Gleckman. He also warns that “middle-income voters may push back if they believe that tax reductions are skewed to business or wealthy individuals.” TPC’s Gene Steuerle thinks that “as long as lawmakers fight mainly over symbols rather than substance,” as is the case with the Affordable Care Act, immigration, and trade, “they are unlikely to achieve many real improvements in policy.”
In Connecticut, will nonprofits pay sales tax? The state’s senate finance panel is considering an end to the sales tax exemption for nonprofit organizations. It saves them $200 million a year.
China rolls back $55 billion in taxes. China’s value-added tax system will have three brackets instead of four. Rates for products like natural gas and farm items will drop from 13 percent to 11 percent. Small and medium-sized businesses will see more tax breaks. China is reforming its tax system to boost growth and consumer spending ahead of an expected slowdown in the second half of this year.
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