“Tax cuts will pay for themselves, believe me.” Treasury Secretary Steven Mnuchin says a Treasury Department analysis finds that the GOP tax cuts would “pay for themselves” by increasing economic growth. But as The Wall Street Journal explains (paywall), there’s no such analysis to be found. Doug Holtz-Eakin, who was a top economic adviser to President George W. Bush and who now runs a conservative think tank says of White House officials’ confidence: “You claim you have an analysis you can’t show… Show your work if it’s supposedly beneficial to your argument.” The House and Senate GOP have proceeded with tax legislation without waiting for Joint Committee on Taxation dynamic scores on the effects of the bills on economic growth.
The House Tax Cuts and Jobs Act is unpopular. Historically unpopular. The Washington Post offers a visual to make the point. “On average, only about 30 percent of Americans support the tax plan… The only thing that was less popular was the Republican healthcare bill that was intended to replace the Affordable Care Act.”
The Senate TCJA still needs to work on its more immediate fan base. Or not. House Speaker Paul Ryan called fellow Badger--Senator Ron Johnson to find out what he needs to support tax legislation. Johnson says he’s against the bill because it treats corporations better than pass-through businesses. Given the Senate’s budget rules, GOP leadership can afford to lose no more than two votes but may just “dare” holdouts like Johnson—or Senator Susan Collins of Maine—to vote against the bill.
But what will they think about TCJA’s “gimmick?” Budget director Mick Mulvaney told Meet the Press that the Senate’s proposal to avoid a ban on adding to the budget deficit after 10 years by rolling back all its individual income tax and estate tax changes is merely “a gimmick.” Said Mulvaney, once an outspoken deficit hawk in Congress, “One of the ways to game the system is to make things expire.” Mnuchin told a similar story on Fox: Because of [Senate budget rules] we were forced to phase out the personal tax side, but nobody thinks that's going to be the case.”
As for the prospect of repealing the ACA’s individual mandate in the Senate TCJA… Mulvaney told CNN’s State of the Union that the White House is willing to drop that provision if it would inhibit passage of the TCJA. Alaska Senator Lisa Murkowski clarified her view—sort of. She explained that while she wants Congress to pass a separate bipartisan bill aimed at stabilizing the individual health insurance market, “one should not assume this is a precondition for my support for the tax bill.”
Given action on the Hill, local governments might want to prepare for the worst. Partial or full repeal of the state and local tax deduction remain a feature of the GOP’s tax plans. The fear in high-tax states, as Politico reports: If the repeal becomes a reality, will states be able to afford their own tax cuts? If not, will wealthy residents of California, New York, and New Jersey move out and shrink those states’ tax revenues? Take heart, high-tax states: Millionaires hardly ever move, and when they do, it’s usually not because of taxes.
In Pennsylvania: The “power to exempt” doesn’t mean “exempt.” TPC’s Richard Auxier explains why Pennsylvania’s homeowners shouldn’t celebrate passage of ballot initiative they might have thought would end their property taxes. In a nutshell: It’s a gimmick that doesn’t address how to replace lost revenue or maintain support for services. “If the state wants to provide homeowners tax relief, they probably need to do a lot more thinking and work.”
Deadline: December 3 for IRS/TPC Joint Research Conference papers. The eighth annual conference takes place June 20, 2018, at the Urban Institute. Guidelines for paper submissions are here. If you would like to submit, send your title, abstract, author names and affiliations, and author contact info to email@example.com by Sunday, December 3, 2017.
Congress is in recess. The Daily Deduction will return to its regular schedule on Monday, November 27. Happy Thanksgiving!
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