Congress agrees to a massive budget deal. In the pre-dawn hours. Congress settled on a huge budget bill that ultimately could add as much as $2 trillion to the deficit over the next decade, according to the Committee for a Responsible Federal Budget. Officially, the bill would increase the deficit by $325 billion over the next two years, though $100 billion in offsets are largely budget gimmicks. If the spending hikes and tax cuts are made permanent, as Congress could well do, the fiscal impact would be much greater. The government is partially shut down this morning but will reopen once President Trump signs the money bill. The White House says he'll do that later this morning.
The bill includes $15 billion in tax extenders. The bill includes $15 billion in tax extenders. The continuing resolution will restore more than 30 tax breaks that expired at the end of 2016 for one year—through 2017. Among the beneficiaries: owners of racehorses, NASCAR tracks, filmmakers, and railroads. TPC's Howard Gleckman wonders why a government that is running $1 trillion-plus annual deficits would give businesses and individuals subsidies for things they did last year. Even Washington can't change behavior retroactively.
A Kentucky college would escape the college endowment tax. The Tax Cuts and Jobs Act imposes a 1.4 percent excise tax on large endowments of some private colleges. It was dubbed the Harvard tax, but a small school in Senate Majority Leader Mitch’s McConnell’s home state of Kentucky, Berea College, got hit too. Not any more, at least not if Congress passes the budget bill. It includes a provision explicitly exempting the college.
Oklahoma Governor Mary Fallin calls for tax increases. In her State of the State address this week, the Republican expressed frustration with the state’s finances after tax cuts in the late 2000s. She wants to repair the revenue failures that occurred under her watch, and has worked with business leaders to raise taxes and enact reforms.
Will the TCJA weaken the tech sector’s credit profile? S&P Global Ratings says “the technology sector may never look the same again,” under the Tax Cuts and Jobs Act. The TCJA allows tech giants to “bring back” billions of dollars from overseas, but it could also create more “fast and loose financial policies that could damage creditworthiness in the sector,” explains MarketWatch.
Canadian firms sue the Trump administration over solar panel tariffs. Three companies claim that the solar products they sell to the US do not harm United States producers. They insist the 30 percent tariffs levied by the Trump Administration on solar cells and modules violate the Trade Act and the North American Free Trade Agreement.
Some good IRS news. The IRS reports steep declines in tax-related identity theft in 2017. The agency credits success to its Security Summit initiatives that helped safeguard taxpayers. There was a 40 percent decline in taxpayers reporting identity theft. Since 2015, the number of tax-related identity theft victims has dropped by almost two-thirds. The IRS has protected billions of dollars in taxpayer refunds.
Next week on the Hill: Senate Finance Committee hearings. Chairman Orrin Hatch announced hearings for Wednesday, February 14, with Treasury Secretary Steven Mnuchin and IRS Acting Commissioner David Kautter. A 10:30 am hearing will cover the Treasury’s budget request and the implementation of the Tax Cuts and Jobs Act. A 2:30 pm hearing will cover the IRS’ rollout of the TCJA.
If you’d like to tell us about a new research paper or have any comments about the Daily Deduction, TPC’s summary of the day’s tax news, write Renu Zaretsky at [email protected]. You can sign up here to receive the Daily Deduction as an email newsletter every weekday morning (Mondays only when Congress is in recess) at 8:00 am.
