Trump’s Treasury pick touts tax reform as a top priority. Steve Mnuchin told CNBC that “by cutting corporate taxes we’ll create huge economic growth and we’ll have huge personal income.” Brad McMillan of Commonwealth Financial noted that "For Mnuchin, tax reform rather than tax cuts, offsetting cuts to deductions [that match] rate reductions, means that the deficit impact will be smaller than was feared."
But Mnuchin’s Plan sounds much different than Trump’s. TPC’s Howard Gleckman sees big differences in the plan Mnuchin described in his CNBC interview and the various proposals his boss campaigned on. To start, TPC finds that Trump’s plan would lavish half its benefits on those making more than $700,000. Mnuchin says the “upper class” would get no tax cut.
Trump’s fiscal path: No walk in the park. TPC’s Rudy Penner outlines the budget process the President-elect and the GOP-controlled Congress face. He offers a reminder that it “does not allow quick action even when the Congress would like to give away lots of money to lots of different people.” His message to those awaiting tax cuts and big new infrastructure spending: Don’t count your money quite yet.
Trump’s tax proposals are already affecting financial plans of the wealthy. Wealth advisers say their clients are adjusting their giving plans in light of likely changes to the tax code in 2017. The President-elect wants to lower the top tax rate (and thus the tax savings from charitable deductions) from 39.6 percent to 33 percent and limit deductions to $200,000 per couple. As a result, wealthy families are front-loading their charitable giving plans. Some are also deferring their income in order to be taxed at likely lower 2017 rates. As a result, federal and state tax revenues may fall in 2016.
Trump’s child care plan: Poorly directed with lots of unanswered questions. TPC’s Elaine Maag explains. “As with all tax benefits, families wouldn’t get financial assistance until they file their tax return in the spring, many months after child care bills were due. For low-income families struggling to pay for child care, benefits from Trump’s plan would not only be too little—they’d also come too late."
Who benefits from a property tax cap? California’s four-decade old Proposition 13 caps property tax assessment increases, and assessments adjust to market values only after properties sell. The result? The wealthiest cities end up with the lowest property tax rates. According to a study by online real estate site Trulia, half of the top 10 California cities with the lowest effective tax rates are in Silicon Valley, where median home prices are above $1 million.
Property taxes shouldn’t go up so easily, says one Texas lawmaker. A Republican state senator wants city and county property tax increases of 4 percent or more to trigger an automatic referendum. Currently, if an increase is 8 percent or more, residents have to petition to hold an election on the tax rate. “Property tax bills go up much faster than people’s paychecks,” said Senator Paul Bettencourt. He wants to voters to be able to consider their ability to pay.
Traveling to Brussels anytime soon? Maybe you won’t want to cut footloose. The Belgian city requires clubs and music cafes to pay a “dance tax” of 40 cents per dancing patron per night. The tax went into effect two years ago, but some establishments are only now facing audits. A club could end up owing as much as €2,000 a year. Chair dancing, anyone?
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