CBO: Budget deficit will exceed $1 trillion in 2020. The Congressional Budget Office projects that the federal deficit will reach $1.02 trillion this year, up from $984 billion and the highest since the nation was climbing out of the Great Recession. The reasons: The 2017 tax cuts and a surge in new spending. CBO projects the economy will grow by 2.2 percent in 2020 and slow through the rest of the decade. President Trump, who promised to balance the budget while president, set a growth target of 3 percent.
Are presidential candidates considering the nation’s debt in their policy proposals? Short answer: No. TPC’s Erald Kolasi and Gene Steuerle elaborate in a new brief. Mandatory spending programs are expanding faster than discretionary spending while total spending is rising faster than revenues and national income. “At this point, neither political party proposes to alter this overall fiscal trajectory, and presidential candidates and the president have suggested new spending programs or tax cuts that would exacerbate these trends.”
TPC’s new feature will help you better understand tax expenditures. TPC’s Frank Sammartino explains that special exclusions, deductions, credits, and other provisions that benefit certain activities or groups of people—tax expenditures—typically are overlooked in discussions about the size of government. TPC has a new online resource to help shine a light on these subsidies and preferences. It features animated videos as well as links to background briefs, blogs, and reports that go into more detail.
The Hamilton Project rolls out a recipe book for reforming the tax code and raising revenue. In a new volume Tackling the Tax Code, the Hamilton Project at the Brooking Institution describes seven ways. The Tax Policy Center’s Bill Gale proposes a Value Added Tax combined with a universal basic income payment. New York University School of Law’s Lily Batchelder suggests an inheritance tax above a large lifetime exemption. Former Obama economic adviser Jason Furman would raise corporate tax rates but create new tax incentives for business investment, and Kim Clausing of Reed College would redesign taxation of multinational corporations. You can watch presentations on the plans here.
Tax Foundation: Sanders’ and Warren’s wealth taxes would more than double the average trade deficit over ten years. The Tax Foundation finds that wealth taxes shrink national income owned by Americans and would “significantly impact international capital flows and cause large economic dislocations in the short term.”
In Kansas: Governor’s Council on Tax Reform moves ahead on some tax reforms. The council, formed last September, released its interim report this week. It recommends a refundable food sales income tax credit, a sales tax on digital assets, and a property tax lid exemption.
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].