When it comes to worker bonuses, timing remains everything. After enactment of the Tax Cuts and Jobs Act, President Trump promoted a flurry of announced worker bonuses as just the beginning of a long-term rise in worker pay. But TPC’s Theo Burke and Steve Rosenthal describe what really happened: The bonuses were largely driven by a short-term tax benefit. Once firms took advantage of the timing shift, bonuses fell sharply.
Foreign-owned banks could benefit extra bigly from the TCJA. The New York Times explains how 2018 Treasury Department guidance could allow foreign banks to largely avoid the TCJA’s minimum tax on multinational corporations. All entities have to do is designate payments to their parents as interest, which is exempt from the law’s minimum tax.
Still talking about a federal budget. Congressional Democrats and Treaury Secretary Steven Mnuchin continued to negotiate a budget agreement they hope will lead to a two-year fiscal plan and a two-year extension of the debt limit. The current sticking points: Offsets demanded by the White House to pay for some additional spending and disagreement within the Trump Administration over the parameters of a deal. The House wants to pass an agreement before it leaves for its summer recess, scheduled for the end of the week.
California’s tax revenue for last fiscal year exceeded estimates by $1 billion. The good news announced on Friday results from higher revenues from personal income, sales, corporate, and insurance taxes. But personal income tax revenue accounted for half of the $1 billion, half of that came from the highest-income 1 percent of households. The state’s general revenue fund is now 0.7 percent higher than projected when lawmakers approved last year’s budget.
The devil did not make them do it. Forbes tells the story of a family in Australia who refused to pay tax because, they said, it violates their religion. The family operates a honey farm in Tasmania, but claims God owns the land. Thus, paying property taxes would equate to worshiping a “false god” and is against God’s will. A judge ruled against the family, saying “in my view, the Bible effectively said that civil matters and the law of God operate in two different spheres.” The family now owes $2 million in taxes.
Taxes might make a person rethink saying “I do.” The Wall Street Journal tells (paywall) the story of University of Michigan economists Betsey Stevenson and Justin Wolfers. They have two children together but are not married — and one reason is taxes. Says Stevenson, who has proposed a tax credit for a second-earning spouse: “Any household where one earner is generating the same income that Justin and I generate together is better off than we are, because of the value of the stay-at-home spouse’s time.” TPC alum Roberton Williams explains “Other countries avoid this by taxing married couples as two individuals.” That would be hard to do in the US for a host of reasons, including state community-property laws.
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