The court fight over President Trump’s financial statements escalates. The president’s lawyers have urged a federal judge to block the House Oversight Committee’s subpoena for years of Trump’s financial statements. They argue that the committee lacks a legitimate legislative purpose.

And so may the trade war with China. The Associated Press reports that Beijing will impose “necessary countermeasures” if President Trump’s threatened tariff increases take effect today. A ministry spokesman said the Chinese government has made “all necessary preparations.” There’s still time for the US and China to reach an agreement—or continue talking-- of course. 

More heat on Free File. Senior Democrats and Republicans on the Ways & Means Committee joined to ask IRS Commissioner Charles Rettig to review the controversial program. Critics charged that commercial tax software firms steered eligible low-income filers away from the free program to their paid tax prep. The bipartisan leadership of the Finance Committee raised many of the same concerns this week. 

Neal: IRS should focus compliance efforts on high-income taxpayers. At a hearing on the tax gap, Ways and Means Committee Chair Richard Neal said the IRS should refocus its compliance efforts on wealthy taxpayers and corporations rather than low- and middle-income filers who claim the Earned Income Tax Credit. The IRS will update its tax gap estimates in a few months. 

About the debt limit… The Bipartisan Policy Center projects the US  will reach the  debt limit sometime in October or early November 2019. The organization updated its modeling with the latest filing data. “Tax season didn’t bring any major surprises, so we now have a better sense of when the Treasury will run out of borrowing room,” said BPC’s Shai Akabas.

Municipalities in Maine won’t get to collect local sales taxes. The state’s House Taxation Committee rejected a measure to allow local governments to add a 1 percent sales tax on goods and services. Local voters would have had to first approve the tax through referendum. Mayors of Maine’s largest cities backed the proposal, saying it would have helped offset losses in state revenue sharing and reduce property tax hikes. 

Save May 30 for “State of the States: The Enduring Work of Tax Reform and the Search for New Sources of Revenue.” TPC’s State and Local Finance Initiative hosts a panel to explore how states are changing their tax and budget policies, how much revenue states can expect from  new taxes on sports betting and marijuana, and how they responding to the Tax Cuts and Jobs Act. The panel includes Joe  Bishop-Henchman of the Tax Foundation, John Hicks of the National Association of State Budget Officers, Nick Johnson of the Center on Budget and Policy Priorities, and TPC’s Kim Rueben. TPC’s Howard Gleckman will moderate. Register for the event here. 

In Europe, mandatory church taxes don’t seem to affect  religiosity. The Pew Research Center surveyed adults about religious commitment in 15 western European countries. In six of those countries (Austria, Denmark, Finland, Germany, Sweden and Switzerland) parishioners  of the largest churches pay mandatory taxes to help finance religious activities. But their attitudes about religion are similar to those in countries without a church tax.

For the latest tax news, subscribe to the Tax Policy Center’s Daily Deduction. Sign up here to have it delivered to your inbox weekdays at 8:00 am (Mondays only when Congress is in recess). We welcome tips on new research or other news. Email Renu Zaretsky at [email protected].