Talk of auto tariffs teases more trade war tensions. President Trump directed Commerce Secretary Wilbur Ross to find out whether the US can levy tariffs as high as 25 percent on auto imports under Section 232, a rarely used law that allows such tariffs in the name of national security. Mexico and Canada account for nearly half of auto imports to the US. Japan accounts for 21 percent, and South Korea 8 percent. On the Hill, backlash was swift: GOP Senator John Cornyn of Texas said “There are “a number of members who are concerned about using national security as a cover for essentially economic protectionism.”
Another tease: A second tax bill later this summer? White House Legislative Affairs Director Marc Short says the White House hopes to unveil a plan “toward the end of summer.” While he said he didn’t want to “get ahead” of Trump’s economic advisers, Short suggested the plan may go beyond extending individual tax cuts enacted under the Tax Cuts and Jobs Act. The idea of a second tax bill has been floating around the House for months, and Ways & Means Chairman Kevin Brady says he’s considering new tax incentives for retirement and business innovation. The Trump White House has made an art of promising big deals but never delivering. What will come first: A meeting with North Korean leader Kim Jong Un or the second tax bill?
How long will small businesses wait for TCJA clarifications? TPC’s Steve Rosenthal tells the Associated Press that guidance could take a while. “Regulation projects can range from months to years — if ever finalized. And each project takes a different amount of time.” A Minnesota real estate developer points out, ““All the time we spend understanding the tax system does not help our customers.”
Is this your idea of a beach book? Are you following this link to the Joint Committee on Taxation’s newly updated list of tax expenditures? If so, you qualify as a true tax geek. Since the TCJA didn’t change very many of the preferences, the new estimates are not very different from JCT’s pre-tax cut version. Still, they are nice to have around.
Preparing to see the judge. Top New Jersey officials say they are ready to sue the Trump Administration if Treasury and the IRS try to block the charitable giving fix to the TCJA’s cap on state and local tax deductions. New Jersey and other states have enacted the fix (which allows their resident to make fully deductible gifts to state authorized charities in lieu of paying partially deductible taxes). Last week, the IRS warned it will not look kindly on the fix. New Jersey Governor Phil Murphy responded: "If we have to, we're going to sue them. Let there be no doubt about that." In a letter to the IRS, State Attorney General Gurbir Grewal had his own warning: "Should the IRS and Treasury Department continue down this path, New Jersey will have no choice but to challenge the new rule in court.”
Alaska lawmakers devote marijuana sales tax money to preventing underage use. They ended their legislative session with a measure to use 25 percent of revenues from the marijuana tax to create an education and treatment fund. More young people in Alaska are smoking marijuana than cigarettes, according to state Senator Cathy Giessel, a nurse practitioner by training.
California legislature fails to cut marijuana taxes. Some state lawmakers had hoped a marijuana tax cut would have reduced black market purchases of recreational marijuana. But the legislation did not advance out a key committee last week.
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