GOP looks forward to a long summer selling the TCJA. The Washington Post dives into the difficulties that Republicans face selling the benefits of the Tax Cuts and Jobs Act. Many voters seem unconvinced that the tax cuts are helping them, and President Trump has shown little interest in promoting the new law. “Lacking a consistent messenger at the top, GOP lawmakers and outside groups are increasingly anxious about their ability to fill the void, particularly ahead of midterm elections that will determine whether the party can keep its narrow control of Congress.”
While states with income taxes deal with TCJA-caused tax increases. The New York Times explores how governors and state legislators are adjusting their own tax codes in the wake of the TCJA. If states don’t adapt their tax codes to federal law, many residents will end up paying more in state taxes. That’s a windfall for state coffers but it won’t be popular among voters. . “Inaction becomes action this time,” said TPC’s Richard Auxier. “People’s taxes will change, states’ revenues will change.”
Case in point: Minnesota GOP lawmakers propose a tax cut. House and Senate Republicans agreed to the outlines of a tax rate cut for the state’s bottom two brackets. The plan, which would phase-in through 2020, would lower the bottom rate from 5.35 percent to 5.25 percent and the second bracket from 7.05 percent to 6.85 percent. The changes would reduce state revenues by $137 million this year and $341 million by 2020. Lawmakers must still work out other details before the legislature adjourns on May 21. Democratic Governor Mark Dayton prefers a tax credit for low-income workers.
TCJA Hearings. On Wednesday, the House Ways & Means Committee’s Tax Policy Subcommittee will hold the first in a series of hearings on the new tax law.
Acting IRS Commissioner: No IRS notice for every proposed IRS regulation. David Kautter said “We have not adopted a hard and fast policy to issue a notice before every proposed regulation,” reports TaxNotes. Time spent drafting notices is time not spent writing the actual regulations.
As for passthrough deduction guidance… TaxNotes also reports that proposed regulations on section 199A—expected in July—will leave some issues unresolved. Guidance on base erosion and anti-abuse tax provisions is unlikely before November.
What else can Seattle do? TPC’s Steve Rosenthal and Richard Auxier think Seattle is headed in the right direction with its proposed head tax, though they have some ideas for how to improve it. “Seattle could design its head tax a little better. But… [h]ow are fiscally constrained cities supposed to find revenue as their populations and services grow? Given limited taxing alternatives, a head tax may be a good option to raise needed revenue.” The city council is set to vote on the $500 per employee tax on Seattle’s large and mid-sized companies today. The mayor is opposed. So is the city’s largest employer, Amazon, which would owe nearly one-quarter of the tax.
In India, Walmart doesn’t want Vodafone’s tax woes. Vodafone has spent much of the past decade challenging tax claims on its acquisition of an Indian unit of a Hong Kong-based company. Walmart doesn’t want the same court headaches now that it has acquired a 77 percent stake in India-based FlipKart Online Services, worth $21 billion. Walmart CEO Doug McMillon says “Our intent is, whether looking backwards related to our acquisition here or looking forward, we will be compliant with whatever the tax rules are.”
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