How will CBO balance costs and coverage under the AHCA? TPC’s Ben Page (a former CBO staffer) explains that under the House GOP’s American Health Care Act, “because only those who purchase insurance are eligible for tax credits, and only those who are eligible generate Medicaid outlays, the more people (on net) who lose coverage, the better for the federal budget. Evaluating the AHCA therefore requires balancing opposing goals: the reduction in insurance coverage versus the federal budgetary savings.”
New TPC estimates show who wins if ACA taxes are repealed. Howard Gleckman boils it down: “Forty percent of the benefit…would go to the highest-income one percent—those making more than $772,000 in 2022.” Their average tax cut: $37,000. Those in the top 0.1 percent, who make at least $3.9 million, would get an average tax cut of $207,000. The lowest income households would get an average of $150 while middle-income households would see an average of $300.
Tax cuts or tax reform: The latest from the White House. In the latest twist in the Trump Administration’s ongoing public debate with itself over the nature of an upcoming tax bill, top White House economic aide Gary Cohn told CNBC on Friday that the goal would be a revenue-neutral tax reform. “We care about the deficit,” Cohn insisted. When President Trump spoke to a joint session of Congress just two weeks ago, he promised to “reduce the tax rate on our companies…At the same time, we will provide massive tax relief for the middle class.”
Tomorrow: Maybe a border-adjustable tax showdown. In a meeting scheduled for tomorrow, German Chancellor Angela Merkel will warn that a border-adjustable tax in the US could prompt Germany to levy higher tariffs on American companies. She calls the BAT a protective tariff and believes it violates World Trade Organization rules.
On the Hill: Another day, another plan? Given BAT-related obstacles facing the House GOP tax plan, Senate Republicans are considering their own version. But they are not going to roll it out quite yet, says Senate Finance Committee Chair Orrin Hatch: “It’s good politics and good friendship to recognize that money bills have to originate in the House.”
Also on the Hill: The House Agriculture Committee will hold a hearing on how “current tax provisions support a vibrant farm sector and offer suggestions for how to address agriculture’s unique challenges going forward.”
More than 1.5 million taxpayers have taken out tax refund loans. The Wall Street Journal reports (paywall) that the federal government’s delay in disbursing some refunds has contributed to the borrowing. Tax prep services are offering interest- and fee-free loans to court customers. H&R Block has loaned $700 million in refund advance loans to 840,000 customers. Liberty Tax made 175,000 loans as of last month and Jackson Hewitt Tax Service has made 485,000 loans. Intuit’s TurboTax is not making such loans. Its CEO said last month, “We didn’t feel that that was the right approach for families who were looking to get money in their pocket.”
In New York State, perhaps an online sales tax… Governor Andrew Cuomo’s proposed budget would treat online marketplaces with sales of $100 million or more, such as eBay and Etsy, just like brick-and-mortar auction houses and consignment shops. eBay and Etsy would have to collect tax on sales made to a New York resident, rather than relying on the individual merchant who use the sites. The firms have cried foul, saying it would be akin to the owner of a shopping mall collecting sales tax for Macy’s. Of course, Macy's only pays rent to a mall for space, not a share of its sales.
Florida lawmakers consider limiting local government’s taxing power. The state’s House Ways & Means Committee approved a bill that would require local governments, except for school boards, to spend down available budget dollars before approving property tax increases. Cities and counties would not be able to pass local option taxes if property tax increases passed in the past three years. Sales tax increases for school construction would require a school board’s four-fifths supermajority. Local referendums that raise taxes would need 60 percent to pass.
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