Is the shutdown door beginning to open? As expected, the Senate rejected both President Trump’s plan to reopen the government in exchange for $5.7 billion in border wall funding and the Democrats plan to simply reopen the government. But senators on both sides of the aisle expressed some confidence that they now could move on to a compromise that would end the partial shutdown. House Democrats may offer their own new plan today: Opening the government in exchange for $5.7 billion for border security (but no wall). The big unknown: Will Trump sign on to any idea?
Mnuchin still a Ways & Means no-show. Treasury Secretary Steven Mnuchin has once again rebuffed a request from Ways & Means Chair Richard Neal to testify on the effects of the shutdown on tax season. Mnuchin now says he won’t appear until after the administration releases its budget plan which will not occur until sometime in February. Neal says he’ll reschedule the hearing when Mnuchin agrees to appear.
And Neal answers Democrats who want him to push harder on Trumps’ tax returns. A group of liberal organizations is blasting the committee chair for not immediately demanding the president’s returns. But Neal says he wants to lay a proper groundwork first: “You're going to have to, I think, resist the emotion of the moment and make sure your case is carefully documented. This is likely to become the basis of a long and arduous court case. You can't step on your tongue."
Treasury keeps the door open for the 20 percent pass-through deduction. Final regulations allow the deduction to a wide range of pass-through businesses. TPC’s Steve Rosenthal identifies some winners including architects, engineers, and professional gamblers. Rosenthal explains that many real estate developers will get the credit but owners of a few small rental properties may not. Bottom line, concludes Steve:“Congress is ultimately responsible for the hodgepodge nature of the 20-percent deduction. But Treasury has done relatively little to restrain its use.”
Sen. Grassley asks the US Olympic Committee: Have you been protecting athletes, as your tax-tax-exempt status requires? The chair of the Senate Finance Committee has told USOC that in his discussions with gymnasts who had been victims of sexual abuse by the group’s physician Larry Nassar, “a common theme … was the general lack of oversight performed by the USOC.” The organization’s tax-exempt status requires it to provide for the safety of athletes.
Warren’s wealth tax. Democratic presidential hopeful Sen. Elizabeth Warren will propose an annual wealth tax on Americans with over $50 million in assets. Details are as yet unavailable, but a 2 percent levy on assets over $50 million and new 3 percent tax on those with assets over $1 billion could raise $2.75 trillion over ten years from about 75,000 families, according to the Warren campaign. She is being advised by economists Emmanuel Saez and Gabriel Zucman.
A tax hike for millionaires isn’t so popular in one corner of Nebraska. State Sen. Tony Vargas has proposed a bill to increase the marginal tax rate for single taxpayers who earn more than $100,000 a year, and married couples earning over $200,000 by 1 percentage point, to 7.84 percent. He’d also levy an extra 1 percent tax on income in excess of $1 million and an extra 2 percent tax on income over $2 million. The state Senate’s Revenue Committee gave the proposal a lukewarm reception, even though 78 percent of Nebraskans, in a recent opinion poll, favored raising taxes on millionaires to help stabilize funding for schools and other priorities.
Speaking of paying more taxes: In Missouri, mistakes were made, mistakes will be felt. The state’s lawmakers are dealing with the fallout from errors in the Department of Revenue’s withholding tables. The Department corrected the mistakes in September but some taxpayers who expect refunds may instead owe the state money when they file in April. Lawmakers say the issue was not widely publicized, leaving taxpayers in for a rude awakening.
In Iowa, a plan to promote the Earned Income Tax Credit. A prominent Sioux City Democrat and a California entrepreneur have launched “Working Hero Iowa,” a nonprofit organization that will educate working families about how the EITC can improve their financial well-being. The organization also will direct people to free tax preparation services.
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