No progress on the shutdown. That’s because, as Vox reports, the partial shutdown of the federal government is not really about $5.7 billion in funding for a border wall, but about grandstanding between two political parties. When Democrats take control of the House on Wednesday, they are likely to move to reopen the government but it is not clear how President Trump or the Senate, still in Republican hands, will respond.
Auto tariffs still are on the table. Commerce Secretary Wilbur Ross told The Financial Times (paywall) that President Trump has “a lot of flexibility” and “complete discretion” in making a final decision on auto tariffs. Commerce is finalizing its report on whether imported cars and parts are a threat to US national security. The report is due February 17; the president has 90 days from that day to decide on tariffs.
Who doesn’t love a carbon tax? Voters, says TPC’s Howard Gleckman. After all, “they require consumers to pay higher prices today in return for the promise of a more livable planet sometime in the future.” Gleckman explains why that promise may not be worth it to average US voters who “seem willing to pay higher taxes that are framed as user fees [but] are not so enthusiastic about levies that are promoted as an environmental initiative.”
New IRS guidance allows corporations to deduct charitable gifts in lieu of SALT payments. The rule provides safe harbors for C corporations and some passthrough entities that make payments to charities in exchange for state and local tax credits. Those payments may be treated as ordinary and necessary business expenses. In September, the IRS said individuals could not take such deductions. Those regs were issued in response to state efforts to work around the Tax Cuts and Jobs Act’s limit on the state and local tax deduction.
Today’s the last day to make 2018 charitable donations, but they may not reduce your tax bill. NPR reports on the surprise some taxpayers face when they tally up their charitable donations in the spring. They may think they can deduct their donations from taxable income, but the TCJA’s higher standard deduction will significantly reduce the number of households who claim itemized deductions at all. TPC’s Joe Rosenberg notes that “it is important to remember the reason people give to charities is much more complicated than just a simple tax story.”
The 116th Congress takes office on Thursday, January 3, and the federal government is partially closed. The Daily Deduction will post Friday and return to its regular schedule on Monday, January 7. Happy New Year.
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.
