“You know I work all day to get you money to buy you things.” TPC’s Bill Gale explains why Republicans may have to redefine “winning” on tax reform as revenue-losing tax cuts. For starters: The destination-based cash flow tax appears to be a non-starter—but it’s the basis for the House GOP tax reform plan. If it’s nixed, there’s no “Plan B.” Gale concludes, “It would be a bad idea to cut taxes for people who don’t need the benefit… financed by deficits that will be borne by future generations.”
“It’s worth it just to hear you say you’re going to give me everything.” The thing is, Americans want tax reform, but they expect it to raise revenue and not add to the deficit according to a study by the University of Maryland’s Program for Public Consultation. It recruited 1,800 registered voters to complete an online simulation to change tax rates in the six categories mentioned by President Trump. Participants also determined their preferred levels of tax revenue hikes or cuts.
“When I get you alone, you know I feel okay…” TPC’s Howard Gleckman explores the internal theological battle with the GOP over tax credits versus tax deductions. Some Republicans insist that refundable credits are an unacceptable subsidy while deductions are not. But the real difference may be who benefits.
“Workin’ like a dog” — California gas tax advocates. Governor Jerry Brown and state legislative leaders want to raise $52 billion over ten years, largely through a 43 percent gas tax increase — or 12 cents per gallon. They would also raise car registration fees and a charge a new $100 annual fee on emission-free vehicles. Their goal: Begin to fill a $59 billion backlog in deferred maintenance on state highways and $78 billion on local streets and roads. Previous attempts to raise the state gas tax have failed.
“Why on earth should I moan?” Business groups don’t like Louisiana Governor Edwards’ tax plan. Edwards proposes a 0.35 percent Corporate Activity Tax, or sales tax, on businesses with gross revenues over $1.5 million. A representative from the National Federation of Independent Businesses says “We support a fair and flat treatment. We don’t see that in this.” The tax, the group argues, would disproportionately harm high-volume, low-margin business like retailers and restaurants.
“You know I feel alright.” Arkansas Senate says yes to a tax on medical marijuana. The state chamber approved a bill this week to impose a temporary 4 percent tax on medical marijuana. The levy, effectively a value-added tax, would be imposed at each step of production through final sale--from growers to dispensaries, to retail customers. The tax could raise $1.2 million in fiscal 2018 and $2.4 million in fiscal 2019 before it sunsets.
“Everything seems to be right.” How to establish a “synthetic control region” when evaluating state policy. A new TPC report by Robert McClelland and Sarah Gault describes the method, provides step-by-step guidance for its application, and explores pitfalls and concerns. The method is growing in popularity in state policy evaluation, as it provides quantitative support for case studies by simulating outcomes in a region absent a particular policy intervention.
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, email us.
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, 2016.