TaxVox 11th Annual Lump of Coal Awards: TCJA Edition. The year’s journey to the Tax Cuts and Jobs Act was a wild one. The new law includes some improvements, as TPC’s Howard Gleckman notes. But it also yielded eleven nominees for worst tax policy of the year. So. Much. Winning.
Check out TPC case studies of different households and the TCJA. TPC has created new case studies that show how the TCJA will affect households in different situations. What will it mean for singles versus married couples, or for people with wage income compared to those who own their own businesses? What about those who live in high-, low-, and moderate-tax states? “Taxpayers with the same income may pay different amounts of tax depending upon the composition of their families, how they earn their income, and where they live,” concludes TPC’s Howard Gleckman.
The TCJA is a special gift to families with children in higher income households. TPC’s Elaine Maag explains that while the law generally will help families with children, “many households with incomes over $75,000 ($110,000 if married) will benefit, for the first time, from an expanded Child Tax Credit.” The new credit begins phasing out for single parents earning $200,000 and couples earning $400,000.
“You all just got a lot richer.” CBS reports that’s what President Trump told fellow diners after he arrived at his Mar-A-Lago club in Palm Beach, Florida, just hours after signing the TCJA. “Mr. Trump directed those comments to friends dining nearby at the exclusive club — including to two friends at a table near the president's who described the remark to CBS News.”
How will the world react to the TCJA? The New York Times reports on potential repercussions of the law’s new corporate income tax rate of 21 percent—including trade tensions and a race among other countries to lower corporate rates and play other “tax games.” That includes China—which might streamline regulations for foreign businesses or defer taxes in exchange for local investment.
Detroit offers Amazon some prime tax breaks in exchange for its second headquarters. Michigan has offered Amazon a chance to avoid state real estate and personal property taxes and Detroit corporate income taxes for thirty years, should the online retailer choose Detroit as the site for its second national headquarters. The state also would allow Amazon to keep all new state income tax revenue that its employees generate for 10 years, and 50 percent of those taxes for the following 10 years. The city would retain revenue from its personal income tax on company employees. The state proposal was put together by a team headed by real estate mogul and Quicken founder Dan Gilbert. The state bid’s cover letter to Amazon, promised, “If you build it, oh they will come.” Gilbert is not new to the concept of huge public subsidies to private firms in return for economic development.
Congress will be in recess this week. The Daily Deduction will post again on Tuesday, January 2. Happy New Year!
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