At least one business is having a hard time after the Tax Cuts and Jobs Act. H&R Block released earnings guidance for 2019 that fell below Wall Street’s estimates. Analysts had projected earnings of $3.14 billion but Block estimates it will make between $3.05 billion to $3.1 billion. The lower forecast likely results from the new federal tax law that may make filing more straightforward, crippling the tax prep firm’s pricing power.
How is the TCJA affecting housing values? The Washington Post reports that while many in the real estate industry predicted a housing slump after enactment of the TCJA, that hasn’t happened… yet. Of course, “other, possibly short-term macroeconomic factors may be overwhelming the real estate tax changes: record-low unemployment, rising incomes and record-low inventories of homes for sale that are driving prices higher.” On the third hand, interest rates are rising and some construction materials costs are rising in the wake of President Trump’s tariffs.
Chicago Mayor Rahm Emanuel proposes a tax on more home sharing services to fund domestic violence shelters. He proposes a two percent tax on home sharing businesses like Airbnb. The tax could raise $1.3 million a year that could fund a 50 percent increase in shelter beds.. In 2016, Chicago enacted a similar four percent tax on home sharing companies to fund homeless services, but Airbnb says its main competitors do not pay it. The new levy would apply to 40 home sharing companies.
Alaska’s pot industry feels the weight of state’s tax on growers. The state legalized marijuana in 2014, but the $800 per pound tax on growers has become too heavy a burden for them to bear. Alaska uniquely taxes marijuana purely on volume: $50 per ounce on the plant's bud and flower and $15 per ounce on the rest. Growers pay the tax when they sell the marijuana to a retailer or manufacturing facility. Alaska’s Tax Division director says if the marijuana industry “overwhelmingly want[s] to go in a different direction, we'll work with them,” but legislation will be needed.
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.
