China retaliates for new US tariffs. Starting September 24, China will impose new tariffs on $60 billion in US goods, making the decision after President Trump announced tariffs on $200 billion worth of Chinese goods on Monday. Commerce Secretary Wilbur Ross says consumers will not notice US tariffs on Chinese goods because “it’s spread over thousands and thousands of products, nobody’s going to actually notice it at the end of the day.”
Senate approves $854 billion spending bill. Yesterday afternoon the chamber approved by a vote of 93 to 7 legislation to fund the Departments of Defense, Health and Human Services, Labor and Education, representing two-thirds of Congress’ 2019 spending. The bill includes stopgap funding for the rest of the government through December 7. This would prevent a government shutdown on October 1.
The federal tax system is becoming more progressive. TPC’s Eric Toder concludes as much from his review of TPC’s newly released baseline tables that show the distribution of income and federal taxes. “For over a decade, legislative changes and real income growth have combined to ensure that the US tax system became more progressive over time. Last year’s Tax Cuts and Jobs Act, however, interrupted that trend and made the tax code less progressive. “ Toder also notes, however that “[t]he combination of economic growth and the expiration of the individual income tax provisions of the TCJA after 2025 means that the federal tax system will become moderately more progressive by the end of the next decade.”
What will become of the Illinois income tax? State taxpayers currently pay a flat rate of 4.95 percent on their income. Depending on the outcome of the govenor’s race to be decided in November, the rate could change. Incumbent Republican Governor Rauner wants no tax increases, but does want structural spending reforms and policies to grow the economy enough to outpace government spending. Democratic challenger JB Pritzker favors a progressive income tax, but since that would require a constitutional amendment, sees more immediate revenue opportunities with legalized sports betting and recreational marijuana use.
Some online businesses in sales-tax-free states still wonder what to do. In June, the US Supreme Court ruled that states can require online retailers to collect sales tax on purchases. But what if the online retailer is based in a state with no sales tax? The New Hampshire Retail Association says it will be very difficult to do for some small businesses. Delaware and Montana have not provided their online retailers much in the way of guidance. Says Christopher Galdieri of St. Anselm College, “A lot of these businesses are figuring, ‘When somebody tells me when to start collecting, and how, I’ll do it, but until then I won’t worry about it.’” According to the Sales Tax Institute, Hawaii, Maine, Mississippi, Oklahoma, and Vermont have already started requiring online retailers to collect sales tax. A dozen more will start October 1, with more to come in November and January.
Apple pays up in the UK. The multinational tech giant paid the Irish government €14.3 billion ($16.7 billion). The European Commission ruled that Apple owed that amount due to illegal state aid in the form of a less-than-one-percent effective tax rate. Apple and Ireland’s government had appealed the decision. Now that Apple is paying, the EU plans to drop its lawsuit against Ireland.
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