Debt limit drama. The Congressional Budget Office estimates that the federal government will hit its debt limit, and exhaust all the measures it usually takes to delay the deadline, by sometime next fall. That means that around the end of this fiscal year, Congress may find itself in the midst of a battle over both the debt cap and spending bills to keep the government open. Fiscal cliff anybody?
Two GOP lawmakers say the debt is a threat to national security. Republicans Rep. Andy Biggs of Arizona and Sen. David Perdue of Georgia plan to introduce tomorrow companion resolutions that declare the national debt a threat to national security. The outstanding public debt now exceeds $22 trillion and annual interest costs exceed $192 billion. They say they want Congress to return to regular order, though it isn’t exactly clear what they mean. The annual federal budget has not been balanced since 1997.
The House rejects Trump’s national emergency. Thirteen House Republicans joined Democrats to vote to nullify President Trump declaration of a national emergency. Last night’s 245-182 vote was well short of what the House would need to override a presidential veto. Nonetheless, the measure now moves to the GOP-controlled Senate.
TIGTA says the IRS decision to block a state SALT cap workaround was “reasonable.” The Treasury Inspector General says last year’s IRS guidance that blocked efforts by several states to convert partially deductible state taxes into fully deductible gifts to state-sponsored charities was “reasonable.” But you’ll never know why since nearly the entire substance of the report was redacted. The report was requested by Ways & Means Chair Richard Neal.
The District of Columbia shows how to expand the EITC for childless workers. TPC’s Richard Auxier reviews a new report from the District’s Office of Revenue Analysis. Concludes Auxier, “The relatively large benefits to workers, the increased EITC claims, and the relatively low revenue cost in the District should give every state reason to consider its own EITC expansion for childless workers..... Better yet, Congress could learn from the District’s experience and finally expand the federal credit."
Kansas legislature adds a cut in the sales tax on food to an income tax bill. GOP lawmakers added a provision to cut the sales tax on groceries to an income tax relief bill. They hope the addition will prevent a veto but Governor Laura Kelly calls their bill irresponsible. The provision would reduce the sales tax on groceries from 6.5 percent to 5.5 percent.
Michigan and Metro Detroit plan to woo Fiat-Chrysler with tax incentives. The automaker, based in Auburn Hills, Michigan, says it wants to invest $4.5 billion in new operations in Detroit. It plans to invest in five existing plans and add one new one. It claims the effort would create 6,500 jobs but wants an incentive package from the state and four Michigan cities including Detroit.
Hackers hit Intuit’s TurboTax. An Intuit spokesman says a third party accessed tax return information but insists it did not breach Intuit’s internal systems. The hacker used a tactic called “credential stuffing”—stealing passwords from other services and trying them all on TurboTax. It works when people use the same password for multiple services and don’t use two-factor authentication.
Bike manufacturers ride past President Trump’s tariffs on Chinese imports. Reuters reports that bicycle makers are moving operations out of China… but not back to the US. Kent, for example, has moved its operations from China to Cambodia though it still purchases about half its components from Chinese producers. The new Cambodian factory cost $20 million, about one year of US tariffs Kent would have paid had it stayed in China and sold bikes back to the US.
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].
