House Republicans want a short-term budget deal with President Obama. They’ve settled on the idea of a short-term spending bill, good through March 31, instead of a long-term year-end budget package. The GOP members want to give President-elect Trump the opportunity to weigh in on the spending bill when he takes office in January. The short-term bill must be passed by December 9—which would allow House members to return to their home districts for the holidays a week early.
And come next year: Infrastructure spending and tax reform? The President-elect has talked about a $1 trillion infrastructure proposal. Some congressional Republicans and many Hill Democrats might be willing to attach a roads bill to a tax measure, using a new tax on un-repatriated foreign earnings of US-based multinationals as the glue. But TPC’s Howard Gleckman says that the repatriation revenue can’t both pay for roads and significantly buy down tax rates. Still, lawmakers such as Commerce Committee chair John Thune (R-SD) want to try to make it work. Thune guesses that Trump’s construction plan “probably hitches a ride on tax reform. I don’t know that just an infrastructure bill on its own, as a stand-alone, would go anywhere.”
Missouri voters just guaranteed themselves future sales tax hikes on clothes and food. TPC’s Richard Auxier explains that the state’s voters were sold a bill of (taxable) goods in a recent ballot initiative. Amendment 4 bars new sales taxes on any service or transaction not currently subject to tax. “But when a state permanently exempts new services from tax it effectively guarantees higher rates on purchases that are already taxable,” explains Richard. “In Missouri, this includes a lot of necessities such as clothes, food, and drugs… Low- and middle-income families are far more likely to buy these items than untaxed services.”
Ohio’s Supreme Court says a Buckeye tax is okay on some out-of-state businesses. The Toledo Blade reports that the court ruled Ohio can collect its gross receipts tax from out-of-state companies with at least $500,000 in sales in the state regardless of whether they have a physical presence in Ohio.
Chicago passes its budget, and the bill goes to… The Chicago Tribune reports that “The average family will pay nearly $1,700 more a year to the city and Chicago Public Schools than they did before the mayor took office in 2011 once all of [Mayor Rahm] Emanuel’s tax and fee increases take full effect.” The city will need to come up with hundreds of millions of dollars more over the next decade to fund municipal pension obligations.
There’s a new NASBO budget and revenue report. The annual report from the National Association of State Budget Officers examines spending in elementary and secondary education, higher education, public assistance, Medicaid, corrections, transportation, and all other areas. It includes data on the State Children’s Health Insurance Program and on revenue sources in state general funds.
And India released rate guidance on its new common goods and service tax. The Tax Foundation dives into the details here. “The guidelines suggest a four-tiered rate structure of 5, 12, 18, and 28 percent along with exempt goods and services…. The lowest rate of 5 percent is levied on mass consumption items such as food, salt, and other necessities. The middle rates of 12 and 18 percent apply to most consumer goods. The highest rate is reserved for luxury goods and sin products, such as cars, gambling, and beer.”
Interested in subscribing to the Daily Deduction, the Urban-Brookings Tax Policy Center summary of the day’s tax news? Sign-up here to get the Daily Deduction delivered to your inbox every morning. If you’d like to tell us about a new research paper or have any comments about our feature, write us at dailydeduction “at” taxpolicycenter “dot” 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.