White House withdraws its nomination of Jessie Liu for Treasury post. Axios reports that the Trump administration has decided not to nominate Ms. Liu to serve as Treasury undersecretary for terrorism and financial crimes. Liu, a former US attorney, oversaw prosecutions against Trump associates Roger Stone, Michael Flynn, and Paul Manafort.
The $3 trillion return of Rosy Scenario. It isn’t news when presidents rely on optimistic economic assumptions to make their budgets look better. But TPC’s Howard Gleckman reports that using a consensus economic forecast would have reduced President’s Trump’s 10-year revenue estimate by $3 trillion. Using CBO’s estimate would have slashed revenue projections by nearly $4 trillion from Trump’s 10-year budget forecast. The White House assumes annual economic growth of 2.9 percent over the next decade. The consensus economic growth forecast is closer to 2 percent. CBO’s is 1.7 percent.
The top 50 corporations knew how to maximize the TCJA. The Joint Committee on Taxation and finds that US corporations maximized the benefits of the Tax Cuts and Jobs Act by accelerating tax deductions into 2017 and deferring income to 2018, after Congress cut tax rates. This contributed to a big drop in federal corporate tax revenue. JCT focused on 50 large companies that generate almost 20 percent of US corporate income. Their income grew 3.8 percent from 2016 to 2017 but deductions jumped 11 percent.
Timing is everything, or not much at all. Early indications from the IRS suggest that households may be waiting to file their taxes. As of January 31, the IRS had received 15,777,000 individual income tax returns. At this point in 2018, the IRS received 18,302,000 returns — 14 percent less. Could the requirement that filers wait to receive Earned Income Tax Credit refunds be contributing to the drop? Or do taxpayers anticipating owing more if they didn’t change their withholding in 2019? Tax season is just getting started. Stay tuned.
Wyden and Brown move to curb some foreign tax breaks. Ranking Senate Finance Committee Democrat Ron Wyden and fellow Democrat Sherrod Brown want to reverse Treasury regulations that let multinational corporations use foreign tax credits to reduce taxes they owe under the Tax Cuts and Jobs Act’s Global Intangible Low-Taxed Income (GILTI) provisions.
Kentucky’s House to consider excise tax on vaping products. A bill to impose an excise tax on vaping and other non-cigarette tobacco products has advanced out of a Kentucky House committee. The 27.5 percent tax on the wholesale price would raise $50 million over the next two years. Right now, vaping products in Kentucky face only a 6 percent sales tax.
Speaking of sin taxes… they’re sweeping the states. Alcohol, gambling, cigarettes, and much more—states are implementing “sin taxes” on a range of activities and behaviors these days. The Urban Institute’s Critical Value podcast Host Justin Milner talks with TPC’s Richard Auxier and Lucy Dadayan about how states are experimenting with sin taxes and key issues policymakers should keep in mind when implementing them.
A historical perspective on taxing wealth to curb political power. Tax historian Joe Thorndike writes for Tax Notes: “…[W]ealth tax plans championed by Sens. Elizabeth Warren, D-Mass., and Bernie Sanders, I-Vt., have been defended as a means to curb not just economic but political power…. But it’s unclear that new taxes on wealth will improve the situation. In fact, those taxes could make matters worse… a wealth tax… might turn out to be an instrument of corruption, rather than a remedy for it.”
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