Ted Cruz has a very simple, very expensive, and very regressive tax plan. The GOP presidential hopeful would make big changes to today’s tax code but his plan would slash federal revenues by $8.6 trillion over the next decade, according to TPC’s analysis. Cruz would repeal the corporate income tax, Social Security and Medicare payroll taxes, and estate and gift taxes. A 10 percent flat-rate income tax would replace seven individual brackets. Most deductions and credits would be gone. Cruz would create a new 16 percent broad-based consumption tax—known in most circles as a value added tax, or VAT. The nation’s highest income households would benefit the most from his plan, getting an average tax cut of $2 million.
What will become of federal online sales tax legislation? Now that Congress decoupled the effort from the ban on state and local taxation of Internet access, will the Marketplace Fairness Act see a vote this year? Neither Senate Majority Leader Mitch McConnell nor House Speaker Paul Ryan will commit to a timeline, other than “sometime this year.” States may be left to tackle the issue individually—because everybody loves more complexity in interstate taxation.
Meanwhile, back in New Jersey. GOP Governor (and former presidential hopeful) Chris Christie proposed a $34.8 billion state budget that would increase funding for public pensions but defer a solution on transportation funding. The fiscal plan projects an $800 million surplus, and raises no taxes. Christie reminded New Jersey voters that he is not a lame duck, and will not consider tax increases—such as a gas tax hike—without lowering rates elsewhere.
“You never count your money while you’re sittin’ at the table…” In Bethlehem, Pennsylvania, the Sands Casino gives away $150 million a year in free slot-machine money as part of its “promotional play,” and enjoys a tax break when customers spend the vouchers in house. The Pennsylvania Gaming Control Board says the Sands has led all casinos in the give-away since it opened in 2009. Governor Wolf would tax that free slot-machine cash at 8 percent, or $12 million a year. But the deal’s not done.
RBS Tax Bill: “Evanesco!” The Royal Bank of Scotland may as well have uttered the vanishing spell used by Harry Potter and his fellow wizards on its tax bill. The bank invested in very complicated financing deals for stakes in two Harry Potter films and nearly two dozen other films. Between 1998 and 2007, RBS enjoyed $1.45 billion in tax breaks even though it paid no production costs, and had no money at risk if the movies bombed. The UK is investigating some of the deals, which according one tax attorney, “are highly artificial transactions done solely for tax avoidance reasons.”
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- © Urban Institute, Brookings Institution, and individual authors, 2016.