The Unified Framework: Too soft, or not soft enough? Tennessee Republican Bob Corker isn’t sure the GOP leadership has the “intestinal fortitude” for a tax overhaul, given that it seems ready to keep the $1.3 trillion state and local tax deduction. Corker maintains he won’t vote for a bill that increases the deficit. But OMB Director Mick Mulvaney, a fiscal hawk when he was in Congress, now says deficits are necessary. “If we simply look at this as being deficit-neutral, you’re never going to get the type of tax reform and tax reductions that you need to…sustain 3 percent economic growth.”
Investors of note have some opinions. Blackrock CEO Larry Fink thinks the tax plan “is going to have to be amended.” He’s concerned that deficits could grow as the country’s elderly population grows. At the same time, he’d like Congress to preserve the state and local tax deduction. Berkshire Hathaway CEO Warren Buffett thinks the odds of tax cuts this year are better than one might think, but noted that none of the 70 or so companies Berkshire Hathaway controls are "noncompetitive in the world because of the corporate tax rate." He also thinks repealing the estate tax would be a “terrible mistake.”
Homebuilders are willing to talk about the mortgage deduction. For the first time in its history, the National Association of Homebuilders won’t absolutely oppose changes to the mortgage interest deduction, Politico reports. The group will focus its lobbying on other tax provisions that encourage homeownership and preserving interest deductions for small companies.
What’s the score? Top Finance Committee Democrat Ron Wyden warns Senate Republicans against pushing through tax cuts without knowing their impact on the budget. TaxAnalysts reports (paywall) that at a hearing yesterday, Wyden said the current discussion of the Senate budget “eliminates the requirement that the reported tax bill be scored at all.” The budget would repeals a point of order that requires an estimate by the CBO.
On the internet, it’s hard to disappear. The Treasury Department last week removed a 2012 staff analysis of the incidence of corporate tax rates. But if you’d like to read it, The National Tax Association still has it available online. The report “assigns 82 percent of the burden of the corporate income tax to capital and 18 percent to labor.” That means a corporate tax rate cut helps workers far less than Treasury Secretary Mnuchin claims.
IRS turns to Equifax for data security help. The IRS has awarded a $7 million no-bid contract to the troubled data services firm Equifax to verify taxpayer identities. The company's lax internal security opened the door to a massive security breach that exposed the personal information of as many as 145 million people. Members of Congress already want to know why the firm got the IRS contract.
Pennsylvania voters will decide on a property tax issue. They’ll choose in November whether to give local taxing authorities the ability to exempt residents from paying property taxes on their homes. If it passes, local tax authorities allowing exemptions would have to figure out how to make up for lost revenue.
EU wants to revise how it calculates VAT. The European Commission yesterday proposed to change the way the European Union levies value-added taxes. Its goal is to tackle fraud and curb excessive corporate tax planning by companies like Amazon. Under the proposal, the EU’s value-added tax in cross-border (online) transactions would be charged at the buyer’s home country rate, not the seller’s rate.
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