Are they for ‘em or against ‘em? When it comes to taxes and GOP governors, TPC’s Richard Auxier says, “The answer depends on the tax. Given budget demands, Republican governors are open to new tax revenue—as long as it is never, ever from individual income taxes.”
Case in point: Iowa may soon see its first gas tax increase in a quarter-century. Republican Governor Terry Branstad may soon sign a bill to raise the tax on gasoline and diesel fuel by 10 cents a gallon. The levy would raise an additional $215 million annually for Iowa’s 114,000-mile road system, which costs $2 billion annually to maintain.
And some Mississippi GOP leaders would ditch the state’s income tax. Sure, the state’s income tax supplies one-third of Mississippi’s revenue, but House Speaker Philip Gunn asks “who is going to vote against putting real, hard dollars into the pockets of their constituents?” Gunn favors a plan that would phase out the state’s income tax by 2030, but only make cuts when state revenues grow by 3 percent. The overall size of the tax cut: $1.7 billion. In contrast, GOP Lieutenant Governor Tate Reeves’ $382 million tax cut proposal would phase out the business franchise tax over 10 years and reduce some income taxes.
Dynamic scoring: It works better with more than one estimate. That’s the reminder from Chye-Ching Huang, of the Center on Budget and Policy Priorities, in her guest post in TPC’s dynamic scoring series. While the new House scoring rule requires only a single estimate, “the uncertainty and gaps in the models may mean that such a simple conclusion isn’t appropriate. Lawmakers will need more information…to assess the reliability of the estimate and to understand a bill’s possible economic effects.”
Back on the Hill, one GOP senator says a gas tax hike might be okay… But only if he sees a tax cut elsewhere in the code. The Hill reports Louisiana’s David Vitter’s comments: “Increasing [the traditional gas tax] in my opinion, that needs to include a tax offset for middle-class families so everyone except the very wealthy don’t pay more federal taxes.” Other Vitter alternatives for funding a highway bill: Taxing overseas income, or expanding US oil production.
McDonald’s tax planning: Some not “lovin’ it.” The European Federation of Public Service Unions and The Service Employees International Union accuse McDonald's of shifting royalty payments from its franchise restaurants to a subsidiary in low-tax Luxembourg. They say the move saved the fast food chain around $1.1 billion in taxes between 2009 and 2013 and want the European Commission to investigate. The subsidiary, McD Europe Franchising Sarl, received over $1 billion in fees from franchisees and subsidiaries across Europe in 2013 but paid tax of just 1.4 percent.
While Greece, wanting to make good on its bailout extension, tries to get businesses and individuals to pay at least some tax. Evasion is a favorite indoor sport in Greece and the new government, with its new debt forgiveness plan with the European Union, is trying to get citizens to pay up (paywall). At the end of last year, Greeks owed $86 billion in unpaid taxes. By some estimates, they dodge one-third of their total tax liability each year.
Wealth inequality in the US: Nine charts tell the story. And the ninth shows how tax subsidies contribute. The Urban Institute presentation shows that “about two-thirds of homeownership tax subsidies and retirement subsidies go to the top 20 percent of taxpayers, as measured by income. The bottom 20 percent receive less than 1 percent of these subsidies. African Americans and Hispanics, who have lower average incomes, receive much less than whites, both in total amount and as a share of their incomes.”
On the Hill… Yesterday, the House approved HR 529, which would expand college savings plans. Today, a House Oversight and Government Reform panel subcommittee will hold a hearing on the Affordable Care Act, and the full oversight committee will receive an update from the Treasury Inspector General for Tax Administration.
Interested in subscribing to The Daily Deduction, the Urban-Brookings Tax Policy Center summary of the day’s tax news? Sign-up here for free access. If you’d like to tell us about a new research paper or have any comments about our new feature, write us at firstname.lastname@example.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, 2020.