Trump’s take on TCJA and family farms. In a speech last night to the American Farm Bureau Federation, the president insisted that family farms were among the biggest winners in the recently-enacted tax law. “We have just signed into law the most significant TAX CUTS and REFORMS in American History — a total of $5.5 TRILLION DOLLARS IN TAX CUTS, with most of those benefits going to working families, small businesses and FAMILY FARMERS." The capital letters are courtesy of the White House talking points released ahead of the speech. Of course, the net tax cut is about $1.5 trillion over 10 years, not $5.5 trillion, and the Tax Policy Center estimates that two-thirds of the benefits of the TCJA go to those making about $150,000 or more. That’s more than double the total median income (including non-farm income) of family farmers, according to the Department of Agriculture.
How will Big Oil do under the Tax Cuts and Jobs Act? Bloomberg reports that “caps on debt-interest payments and cuts to deductions from previous years’ losses may hurt companies building capital-intensive projects with borrowed money.” That includes companies that drill overseas or focus on refining oil.
But the new tax law gives Berkshire Hathaway a boost. Billionaire Warren Buffett’s conglomerate will see a 12 percent, or $37 billion, increase in its book value in the final quarter of 2017. That’s because of lower tax liability on its appreciated investments available under the Tax Cuts and Jobs Act.
And the TCJA has given Visa a reason to increase its employee match to its 401(k) program. Previously, Visa would match an employee’s contribution of up to 3 percent of earnings with a 6 percent contribution. Now, thanks to the TCJA, if an employee contributes up to 5 percent of earnings, Visa will contribute 10 percent.
Will news like this help the GOP sell its unpopular tax law? Lobbyists are taking no chances. So far, the American Action Network has committed $10 million to boost the law. Advocacy groups tied to the Koch brothers have pledged a multi-million dollar campaign to promote the TCJA. The 2018 elections are less than 10 months away.
Is the IRS manipulating withholding tables? In the latest example of how toxic Washington has become, the top Democrats on the Ways & Means and Finance panels want to know if the Trump Administration is pressuring the IRS to produce withholding tables that would result in under-withholding, thus making people think their tax cuts are bigger than they really are. Ron Wyden and Richard Neal wrote a joint letter asking David Kautter, who is in the awkward position of serving as acting IRS commissioner and Deputy Treasury Secretary for Tax Policy.
Less than 10 days away: More government shutdown drama. Budget expert Stan Collender writes that while another temporary spending bill is likely all that Congress will be able to muster by January 19—when the government runs out of money—there’s also a chance that President Trump will hold fast to his demand for a border wall, promised to his base. Explains Collender: “Government shutdowns typically happen because of emotional issues rather than substantive differences and, in what should be considered an understatement, Trump is dealing with multiple issues right now that qualify as emotional.”
House GOP leaders hope to fill key posts tonight. The House Steering Committee plans to pick a new budget committee chair to replace Rep. Diane Black and a new member of the Ways & Means Committee to fill the vacancy of Rep. Pat Tiberi.
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.
