“Well I'm accustomed to a smooth ride.” As expected, the TCJA is not paying for itself. The New York Times takes a closer look at how the Tax Cuts and Jobs Act is not generating more revenue than prior law despite the Trump Administration’s promises to the contrary. Though economic growth has accelerated, federal tax revenue declined slightly from 2017 to 2018.
“Or maybe I'm a dog who's lost its bite.” Banks’ earnings growth is about to slow. The Wall Street Journal explains (paywall) that fourth quarter results due this week will be last in which the TCJA’s new 21 percent corporate tax rate will be compared to the old 35 percent rate. While that contrast has magnified earnings growth, first quarter profits will look more modest compared to the first quarter of 2018.
“I don’t expect to be treated like a fool no more.” Iowa’s only nonprofit blood centers have to pay $1 million in new taxes under a new state law that defines them as drug manufacturers. Iowa cut overall taxes last spring, but now requires the two centers and their branches to pay sales and use taxes on most of the equipment they use to collect, test, and distribute donated blood. Iowa is one of three states that tax nonprofit blood centers. GOP legislative leaders and Gov. Kim Reynolds vow to fix the problem.
“I don’t expect to sleep through the night.” The Washington Supreme Court sent a dispute over Seattle’s income tax case to state Court of Appeals. The state’s high court will not immediately consider a lower-court ruling that nixes Seattle’s income tax. The city petitioned for a high court review of the case in December 2017 after a King County Superior Court ruled the tax on well-off households was unconstitutional.
“We had a lot of fun, we had a lot of money.” Arkansas’ Governor Asa Hutchinson starts his second term by proposing more tax cuts. He’ll be sworn in tomorrow and his top agenda items include a cut in the state’s top income tax rate from 6.9 percent to 5.9 percent over four years. This would cost $192 million. Because some residents would see higher tax rates, the plan would need to be approved by a three-fourths vote in the state legislature.
“Some people say the sky is just the sky, but I say…” TPC’s Howard Gleckman is troubled by his colleague Bill Gale’s solution to avoid government shutdowns. Gales suggests that if Congress fails to pass spending bills, funding would automatically default to the most recent year’s levels with additional money to cover inflation. But Gleckman counters that this would make it too easy for Congress to abdicate its Constitutional responsibilities to decide how government should raise and spend money and put more and more of its fiscal decision-making on autopilot.
“Some have fled from themselves or struggled from here to get there.” As the partial federal government shutdown heads into its 23rd day, there has been no movement towards a solution. A Washington Post-ABC News poll released yesterday reports that nearly twice as many respondents blame President Trump and the GOP for the shutdown as blame Democrats. However, the same poll shows that support for a border wall is increasing, especially among Republicans. Meanwhile, Sen. Lindsey Graham, a strong Trump supporter, is now urging the President to sign a bill to temporarily reopen the government while he negotiates with Congress over the border bill.
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