Today on the Hill: Mnuchin and Cohn. Treasury Secretary Steven Mnuchin and National Economic Council Director Gary Cohen will meet with Senate Majority leader Mitch McConnell and members of the Senate Budget Committee today. Their goal: Figure out how to pass a budget. Without one, the Senate can’t pass tax reform unless McConnell can round up Democratic support.
Tax relief for hurricane victims? House Ways & Means Chair Kevin Brady is floating one idea: allowing victims to access retirement savings in 401(k) accounts without paying any penalties. There’s no bill and thus no details yet, but Brady wants it known that “It's important that our package be helpful, not wasteful.” Question is: How many Texans have enough retirement savings to rebuild flooded homes?
History tells us that calls for a simple tax code go unanswered. The President says he wants a simple tax code—something it hasn’t been for a century. Will he get it? Tax Analysts’ Joe Thorndike considers the long-held desire of politicians and their constituents for tax code simplicity. In his essay for Forbes, he offers a reminder: “Many people want a simpler tax system, but they want other things even more. Specifically, they want the tax system to be fair.”
Is the SALT deduction a matter of red and blue? TPC’s Len Burman and John Iselin consider the political advantage Republican lawmakers believe they hold when proposing to repeal the state and local tax deduction as part of tax reform. The deduction is more valuable to higher-income taxpayers in states with higher taxes—and conventional wisdom says those states vote Democratic. Dive deeper into taxpayer distribution at the congressional district level, and the red-blue divide is not so clear.
Connecticut Democrats are willing to deal. The state lawmakers are working with Governor Dannel Malloy to end a budget standoff with Republicans. Democrats are willing to give up efforts to increase the state’s 6.35 percent sales tax. If lawmakers don’t reach a deal by Thursday, time may run out to pass a budget by October 1. Absent a new budget, the Governor would have to make cuts to municipal aid.
A college asks for a promise in Colorado. Colorado’s complicated constitutional anti-tax provisions are curbing tax assessments in six Front Range counties—all experiencing a real estate boom. So Colorado Mountain College (CMC) has a novel idea: It wants a referendum to ask voters to approve permanently any and all future tax rate increases to offset “Gallagher-triggered” cuts in assessments. “Gallagher,” a constitutional provision, forced the state to cut the residential assessment rate, thus cutting residential property tax bills by 9.5 percent in 2018. Should the CMC initiative pass, it is sure to be challenged in court under another constitutional provision, the state’s Taxpayer Bill of Rights (TABOR).
There’s nepotism, and then there’s nepotism. California’s Board of Equalization, now under personnel audit, seems to be a “family affair.” One in five employees works with a relative, and several families there have nepotism conflicts with supervisors. Wrote one whistleblower in the Special Taxes and Fees Division in an email several months ago: “Just got out of the elevators full of all related family members.”
Thursday on the Hill… The Senate Finance Committee will hold a hearing on individual tax reform. The panel will host Lily Batchelder of New York University, Alex Brill and Ramesh Ponnuru of the American Enterprise Institute, and Iona Harrison of Pioneer Realty.
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