Whither the “carried interest loophole?” House and Senate Democrats plan to hold President Trump accountable to his promise to repeal the carried interest loophole. High-earning investment fund managers earn “carried interest” income—taxed as capital gains at a maximum 20 percent rate—for managing client funds. Trump said carried interest would be “gone” in an interview this week, but his one-page tax plan outline does not mention that. Maybe that’s because the president’s plan would tax carried interest at the15 percent rate proposed for pass-through business Income.
Kansas lawmakers faced Governor Brownback over tax increases—and blinked. The governor promised to veto a compromise bill that would have eliminated an income tax exemption enjoyed by more than 300,000 business owners and created a new top personal income tax bracket. Senate leadership withdrew the bill, taking the Senate and House back to the drawing board.
Connecticut’s income tax revenue continues to fall. The state now expects income tax revenue over the next two years to fall $1.46 billion below recent projections. Revenue collections for the current fiscal year are already expected to fall by $413 million, turning a small projected surplus into a $390 million deficit. Could tax increases be on the horizon?
Pennsylvania’s in the same boat. The state’s revenue department said April’s tax collections came in $537 million below expectations. Ten months into the fiscal year, the state’s budget shortfall is over $1 billion. Democratic Governor Tom Wolf expects May to be a better month though, thanks to anticipated corporate income tax receipts.
West Virginia lawmakers continue to grapple with tax proposals. House delegates are worried that Democratic Governor Jim Justice’s plan to increase the sales tax from 6 to 7 percent will make it harder for border counties to compete with neighboring states. Justice also has a plan to tier severance taxes on natural gas between 5 percent when gas is priced at less than $3 per thousand cubic feet to 10 percent when natural gas is priced at $9 or more per thousand cubic feet. Opponents fear that such “tiering” would benefit some coal companies at the expense of others.
Seattle could see some tax changes soon. The City Council approved a resolution to consider a “progressive income tax targeting high-end households” by July 10. Still to be determined: the type of household income to be taxed, the definition of “high-end,” the tax rate, the collection method, and revenue use. Meanwhile the King County Council voted to place a 0.1 percent sales tax increase on the August primary ballot. The tax would generate $67 million annually to fund arts, culture, and science programs.
The National Tax Association is looking for conference papers. It holds its 110th Annual Conference on Taxation in November in Philadelphia. Topics include taxation and tax policies, expenditure policies, government budgeting, intergovernmental fiscal relations, and subnational, national, and international public finance. Focus will be on policy-relevant research bearing on taxation and government spending. Submit papers or complete sessions at https://editorialexpress.com/conference/NTA2017/ by Friday, May 12.
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