TPC and Wharton have macroeconomic models to score major tax plans. Howard Gleckman explains that TPC has added its own internal macro model as well as a separate model from Wharton to its capacity to analyze major tax plans, including those from the presidential candidates. TPC will continue to produce traditional revenue scores and distributional analyses that assume people change their behavior when taxes change. But TPC can now score tax plans in a way that accounts for their effects on demand. Wharton will work with TPC to produce a second dynamic score that reflects how individual households respond to tax changes over a long period of time.
And the first plan we scored: The House Republican blueprint. TPC’s traditional score shows that the plan would reduce federal revenues by $3.1 trillion over 10 years. TPC’s dynamic score shows that federal revenues would drop by about $3 trillion. The plan’s tax cuts would boost demand and increase economic output substantially in 2017, but the economy would soon return to its long-term level of potential growth and tax revenues would slow. Wharton’s model reveals a 10-year tax-revenue loss of about $2.7 trillion. The bottom line for all estimates: By the second decade, rising deficits crowd out more private investment and reduce both economic output and tax revenues.
Real estate tax breaks have been very, very, good to Donald Trump. The New York Times reports on $885 million in tax breaks secured by the GOP presidential nominee over the course of his real estate investment career. The tax breaks include “grants and other subsidies for luxury apartments, hotels and office buildings in New York, according to city tax, housing and finance records. The subsidies helped him lower his own costs and sell apartments at higher prices.”
This Friday at Urban, learn about the fiscal impacts of immigration. The Urban Institute and the University of Southern California Sol Price School of Public Policy will host a discussion of the major results of the first comprehensive examination in 20 years of the economic and fiscal impacts of US immigration. Several of the study’s coauthors will present their findings, and TPC’s Kim Rueben will be among the speakers. You can register here for the September 23 event.
Canada plans to set a price on carbon. The Environment Minister, Catherine McKenna, said that the nation will impose a price on carbon emissions in provinces that do not sufficiently control carbon emissions on their own. Canada's Liberal government has not yet detailed its plan for those provinces, but the pricing will begin sometime in October. The four largest provinces in Canada (British Columbia, Alberta, Ontario and Quebec) either have a tax on carbon or a cap-and-trade emissions control system. The remaining ten provinces would like to control carbon emissions in their own way.
Apple just had to pay back taxes in Japan. The Tokyo Regional Taxation Bureau found that the tech giant’s Japanese subsidiary, iTunes Japan, under-reported income in 2014 and 2015 when it sent a portion of its profit to its Irish unit. iTunes Japan did not pay the required 20.42 percent tax on those royalties. Apple in turn paid $118 million in back taxes.
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- © Urban Institute, Brookings Institution, and individual authors, 2016.