House buries Koskinen impeachment effort. The House overwhelmingly voted to send a resolution to impeach IRS Commissioner John Koskinen to the Judiciary Committee for further consideration. The action effectively kills the effort, lead by the conservative Freedom Caucus, for this year. And, given the lopsided 342-72 vote and what will be an extremely busy schedule next year, probably ends the matter. Koskinen's term expires in 2018.
Tax reform? Voter say "Meh." Politico and Morning Consult asked registered voters what they thought of "comprehensive tax reform to lower personal and corporate tax rates." Just 37 percent said it should be a “top priority,” while 34 percent said it should be "an important but lower priority." Seventeen percent said it was either "not too important" or "not important at all." The same poll found that voters loved President-elect Trump’s Carrier deal. Sixty-two percent said it is acceptable for the president and vice president to offer tax breaks or incentives to individual companies to keep jobs in the U.S.
About Trump’s threat to impose tariffs on US firms that move jobs offshore. TPC’s Howard Gleckman says Trump’s weekend tweet storm raises many questions it did not answer. Exactly what companies would be subject to his import tax, and would he impose such a levy on US-based multinationals but not on their foreign-resident competitors?
What might it look like to restructure the mortgage interest deduction? TPC’s latest report considers three options: replacing the deduction with a 15 percent non-refundable credit; reducing the ceiling on debt eligible for an interest subsidy from $1 million to $500,000; and combining the two ideas. Any of these would raise federal tax revenue and make the tax system more progressive. Distributional effects would differ by state of residence.
A closer look at reforming child and work provisions in the federal income tax. TPC’s Bob Williams dives into TPC’s new paper. Authors Jim Nunns, Elaine Maag, and Hang Nguyen designed a plan that would separate the income tax’s work and child provisions, simplify filing, and distribute tax benefits more equally across intended recipients. “The plan wouldn’t be cheap—the authors estimate that it would reduce income tax revenues by nearly $1.1 trillion over ten years,” notes Williams, but “it could provide ideas for tax reform next year.”
Trump’s plan to encourage companies to repatriate their overseas corporate profits could be a boon to drug makers. The President-elect’s 10 percent repatriation tax would reduce the levy on untaxed foreign earnings from 35 percent. The idea: Companies would use the money to hire new workers and make new investments in R&D. But Pharma analysts say multinational drug companies would likely make acquisitions instead. Deals like that could spur job cuts when companies identify “synergies,” or overlaps in staffing.
The US remains a low-tax nation. The Organization for Economic Cooperation and Development, a 35-member group of industrialized nations, has a new report out on the taxes paid in 2015 by individuals and corporations. The United States’ total tax burden, including state and local taxes, is 26.4 percent of its GDP. Only South Korea, Ireland, Chile, and Mexico have lower tax burdens.
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- © Urban Institute, Brookings Institution, and individual authors, 2016.