Where is the post-TCJA investment boom? In spite of President Trump’s assurances that the Tax Cuts and Jobs Act would turbocharge investment, that hasn’t happened. The Washington Post explains why. And why it might not anytime soon: “His tax cut certainly seems to have juiced growth this past year, but since it wasn’t paid for, it has also made the Federal Reserve raise rates enough that its net effect should be pretty close to zero by the end of the next year or so.”
Waiving underpayment penalties. The IRS's Information Reporting Program Advisory Committee is recommending the agency waive penalties for tax year 2018. Normally, taxpayers owe penalties if they don’t pay at least 90 percent of taxes owed for the current year or 100 percent of what they paid in the prior year either through withholding or estimated payments. But because the TCJA made so many changes to the individual income tax, including repeal of personal exemptions and a big increase in the standard deduction, lots of taxpayers are likely to either owe more than they expect next April or will get bigger refunds. The IRS has developed a calculator (so has TPC) but few are using it.
Where is that 10 percent middle class tax cut President Trump promised? Well, you won’t see it this week or even in the lame-duck session of Congress. TPC’s Howard Gleckman explains the method behind President Trump’s recent vow to cut taxes again before November 6. And House Ways & Means Chair Kevin Brady told CNBC that a ten-percent tax cut for middle income Americans is a GOP priority… later: “We expect to advance this in the new session of Congress if Republicans maintain control of the House and Senate.”
What’s going to happen to the nonprofit sector next year? TPC’s Howard Gleckman considers whether the TCJA—which reduced the number of households that will claim a tax deduction for charitable giving—will transform giving itself and the non-profits that rely on it. After continuing to donate this year, will many taxpayers learn for the first time in April that claiming the standard deduction will erase the tax benefit of their donations? Then, Gleckman asks, “what will they do in 2019? We will get to observe a fascinating natural experiment, though the nation’s non-profits would rather not be part of it.”
How will communities fare with Opportunity Zones? TPC’s Steve Rosenthal and the Urban Institute’s Brett Theodos discuss the IRS’ proposed guidance to investors interested in using the TCJA’s attractive tax incentives to encourage investments in economically-distressed communities. Rosenthal and Theodos warn “there is a serious risk that Opportunity Zones will foster a lot of investor interest, without substantially benefiting the communities. Only robust reporting will tell us whether this increasingly generous tax program is achieving its stated ends of drawing new capital into economically struggling communities and improving the lives of their residents.”
Tax or Treat? TPC’s Richard Auxier digs into the voter initiatives on state taxes, ranging from new levies on carbon, payroll, motor fuels, marijuana, soda, and tobacco, to new limits on various taxes and on lawmakers’ ability to enact them. He writes, “Direct votes on a state’s tax policy can have long-lasting effects on a state’s fiscal direction… examining these ballot initiatives is like a kid laying out her candy haul after trick or treating.” Read up!
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