Tomorrow in the US Supreme Court: Oral arguments in South Dakota v. Wayfair. The state will ask the High Court to overturn its own 1992 decision in Quill Corp. v. North Dakota that prevents states from requiring retailers to collect sales tax unless a business has a physical presence in the state. The Trump Administration is backing South Dakota. In a friend of the court brief, it wrote, “In light of Internet retailers’ pervasive and continuous virtual presence in the States where their websites are accessible, the States have ample authority to require those retailers to collect state sales taxes owed by their customers.”
And in the House this week: Votes on IRS bills. One bill changes IRS customer service and appeals processes, and boosts taxpayer rights during enforcement matters. A second bill aims to improve IRS cybersecurity and information technology.
Tax extender beg-a-thon. House Ways & Means Committee Chair Kevin Brady is no fan of tax extenders, but he’s invited members to come to a closed-door “roundtable” on Wednesday to make the case for their favorite expiring tax provision. Rep Vern Buchanan, chair of the panel’s tax policy subcommittee, will chair the session. The next step in the ongoing saga of tax extenders is unclear, however.
Does the Tax Cuts and Jobs Act reflect good tax policy? TPC Director Mark Mazur testified before the Joint Economic Committee last week on whether the TCJA meets the four basic tenets of good tax policy. Does it raise enough revenue? Are changes efficient, equitable, and do they simplify the tax code? Concludes Mazur: “The jury is out on the effects of the Tax Cuts and Jobs Act, but given the structure of the Act, with numerous parts scheduled to increase, phase-in, or phase-out, Congress will have many opportunities to evaluate the Act and make any necessary changes.”
Are tax cuts boosting retail? Commerce releases its March retail sales report today, and some economists think consumers might be spending a bit more given the extra take-home pay resulting from the TCJA. American consumers had reduced spending in the previous three months.
Some thoughts at the end of tax season. Ed Kleinbard, professor at the University of Southern California’s law school and former chief of staff for the Joint Committee on Taxation, writes for the Los Angeles Times, “Tax policy is a bore, until they come to take your Social Security and Medicare away. Yes, our federal budget deficit trajectory is unsustainable, but the reason is not profligate or unexpected social spending. Tax Day is as good as any other to reflect soberly on the price our country will pay for systematically undertaxing itself.”
Kentucky legislature overrides budget and tax bill vetos, but the governor can veto their bill fixes. On Friday, the Kentucky House and Senate overrode Governor Matt Bevin’s vetoes of budget and tax bills, which will now become law. Bevin objected to the “sloppy” and “non-transparent” $480 million tax increase designed to pay for education funding. Over the weekend the state’s assembly made changes in three different tax and budget bills, but now the package yields $396 million.
New Jersey adopts a SALT work-around. The Garden State is the latest to adopt a fix to the TCJA’s cap on itemized deductions. The state assembly voted 68-1 to authorize local governments to convert property taxes—now subject to a $10,000 deduction cap-- into fully deductible charitable gifts. Gov. Phil Murphy says he’ll sign the measure.
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.
