A new poll on the TCJA hints at GOP trouble this fall. A recent CNBC poll finds that only 32 percent of working adults reported having more take-home pay due to the Tax Cuts and Jobs Act. . For Republicans hoping to claim economic benefits of the new law in advance of November elections, the news comes as a bit of an “uh-oh.”
How you do depends on where you live. A new TPC report shows that between 60 percent and 76 percent of taxpayers in every state will benefit from the TCJA’s individual income tax provisions in 2018. In most, the average change in after-tax income will be close to the 1.8 percent national average. But there may be significant differences, especially for upper income households who lose the benefit of the state and local tax (SALT) deduction.
There is some good news about how the TCJA is doing. TPC’s Ben Page explains that “evidence of its impact has been limited, but the results seem to be a modest positive—pretty much as the Tax Policy Center and other independent analysts predicted.”
But is it tax reform? TPC’s Harvey Galper doesn’t think so. The TCJA “upended the key principle of the Tax Reform Act of 1986, namely that an ideal revenue system should tax a broad base of income at low rates.” It may be the most politically realistic way of improving economic efficiency through the tax code, but it fails other tests of tax reform, namely simplicity, equity, and revenue sufficiency.
New York State lawmakers agreed to twin plans to give residents relief from the Tax Cuts and Jobs Act. The measures would allow New Yorkers to pay local property taxes as charitable gifts. The second would let businesses pay employee income taxes as a deductible payroll tax.
Why is the US Olympic Committee tax exempt? TPC’s Howard Gleckman considers the question: “The USOC operates far more like a business than a charity… Why does the tax law grant non-profit status to an entity whose primary business model is to create content for television and other media?”
China offers tax breaks for some of its tech firms. As the US considers tariffs on $50 billion worth of Chinese exports, China’s finance ministry will offer tax breaks and exemptions to firms making semiconductors. The government wants to limit its dependence on foreign chips.
Have you registered yet? On April 9, TPC’s Third Annual Lubick Symposium focuses on tax administration challenges and the TCJA. Participants will consider the challenges that the new law creates for tax administration and compliance, as well as what Treasury guidance would best provide certainty to taxpayers. For example: How will the new pass-through provisions affect taxpayer behavior and limit opportunities to minimize tax liability? The Monday morning event will take place from 9:30 am to 12 noon at the Brookings Institution, and will be webcast live. Register here.
Congress is not in session. The Daily Deduction will return to its regular schedule on April 9.
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