No BAT, no deficit-busting, “pump priming” tax reform, says Senator McConnell. The Majority Leader told Bloomberg that the border adjustable tax would not likely pass the Senate but that any tax overhaul still “will have to be revenue neutral. We have a $21 trillion debt.” This runs counter to President Trump’s willingness to boost the short-term deficit to “prime the pump” for economic growth. The timeline for a tax bill? McConnell wouldn’t say.
About that mortgage interest deduction… President Trump says he won’t touch it, but his tax outline would make it worthwhile only to the most wealthy homeowners. That’s because Trump would raise the standard deduction. At current interest rates, a homeowner would need a mortgage balance of $608,000 for the interest deduction to exceed the standard deduction. That’s triple the mortgage on a median-priced home in the US. TPC’s Joe Rosenberg explains that the Trump administration is “selling it as a sort of simplification… embracing the fact that there would be fewer people who itemize and take these deductions.”
And the fate of the home sale exclusion? Uncertain. An eligible homeowner can currently exclude from capital gains taxes up to $250,000 of the profits on a home sale. Neither President Trump nor the House GOP say how they’d treat this capital gains exclusion in their tax plans. Is no news good news… or bad?
Mnuchin to talk taxes with Senate Finance panel members. Politico reports that the Treasury Secretary will meet privately today with all committee members to discuss a coming tax bill. NEC chair Gary Cohn may tag along. Panel Democrats have been frustrated that Trump aides have been unwilling to engage on taxes.
In the United Kingdom: More pledges from the Labour Party. It would raise £48.6 billion by boosting the income tax rate on income above £80,000, raising corporate tax rates, and imposing an “excessive pay levy” on salaries above £330,000. It would use the money to improve schools and the National Health Service, and expand free child care. The party holds only about one-third of the seats in Commons and its plan will go nowhere.
And in Denmark… The country will embark on an investigation into mismanagement and fraud that cost the country’s tax department about 100 billion kroner, or $15 billion. Denmark’s tax department has endured years of staffing cuts and stalled efforts to digitize tax collection.
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.