Budget blues on the horizon? The Wall Street Journal considers (paywall) the first obstacle congressional Republicans must overcome before tax reform: The budget. Congress hasn’t completed one in 15 years, but given the GOP’s narrow control of the Senate, it will need to do so to pass its fiscal agenda, including a tax bill. But can they?
Message of the Day. Top Administration aides and House Republican leaders had one unified message to deliver yesterday: Congress will pass a tax bill this year. Treasury Secretary Steven Mnuchin, House Speaker Paul Ryan, and House Ways & Means Chair Kevin Brady all said so. Many outside observers are skeptical.
Business leaders push for permanent tax cuts. At yesterday’s tax reform hearing, several corporate CEOs urged the House Ways & Means Committee to make tax changes permanent. Said Emerson Electric Chair and CEO David Farr: “I make decisions over three years, five years and 10 years. I don’t make a decision by a quarter.” Some GOP lawmakers have said they’d be okay with temporary tax cuts to avoid a Senate filibuster. Any bill approved under special 50-vote budget rules that adds to the deficit must sunset after 10 years.
What’s the matter with alternative scoring methods? It’s hard to trust them, Treasury Secretary Steven Mnuchin told the Senate Banking Committee yesterday. “I am concerned as to whether some of the models will attribute enough growth in dynamic scoring but when we present the details we will present how we think it should be paid for.” He also assured panel Democrats that the Administration would include anti-gaming rules in its plan to cut the pass-through business tax rate to 15 percent. TPC estimates that without those rules, such a rate cut on a broad definition of pass-through income could reduce revenue by up to $2 trillion over 10 years.
Maybe models are to blame for Kansas? The Center on Budget and Policy Priorities finds that current GOP proposals to cut tax rates have a great deal in common with the tax cut experiment in Kansas. The state enacted big tax cuts in 2012, expecting economic growth to follow. But the tax cuts didn’t drive additional growth and the drop in tax revenue required deep reductions in services, delays to road projects, and a school funding crisis.
Who is helped by different health insurance premium tax credits? A new report by Urban Institute researchers John Holahan, Linda Blumberg, and Erik Wengle concludes that younger people would receive larger credits on average through the House-passed American Health Care Act while older adults typically receive larger premium tax credits under the Affordable Care Act.
Down Under: Perhaps the biggest white collar crime Australia has ever seen. Australian police have charged the deputy commissioner of the Australian Taxation Office (ATO), his son, daughter, and six others in an AU$165 million tax fraud scheme. Federal Police allege that a payroll company paid only a fraction of its income tax liability by funneling wage payments through a second firm. Police do not believe the deputy commissioner was aware of his son’s scheme, but may have given him access to some information that made it possible.
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