The IRS remains without a leader. IRS Commissioner John Koskinen’s term expired last November. In February, President Trump nominated tax attorney Chuck Rettig to replace him, but the Senate Finance Committee didn’t receive his paperwork until last week. Given the passage of the Tax Cuts and Jobs Act and the other challenges facing the IRS, “there should be a greater sense of urgency here,” said TPC’s Mark Mazur, a former Obama administration Treasury Department official.
Credit where credit is due? A new survey by the National Association for Business Economics shows business economists are optimistic about the near future. More of their companies expect rising sales, more hiring, and pay increases. But nearly two-thirds of respondents say that the TCJA tax cuts have not affected their plans. Rather, they credit worldwide growth, and the nearly nine-year-old US expansion.
Ways & Means chooses a new staff director. Politico reports that Gary Andres will get the post. Andres had been staff director of the House Energy and Commerce Committee and most recently worked for a trade group representing the biotech industry. He is replacing Dave Stewart, who left for the law/ lobby shop Squire Patton Boggs. Keeping it all in the family, Andres is Stewart’s father-in-law.
The deficit could be even worse than CBO thinks. Earlier this month, The Congressional Budget Office projected trillion dollar-plus deficits as far as the eye can see. But TPC’s Bill Gale and Aaron Krupkin note that the CBO forecast assumes current law remains in effect. Thus, TCJA’s the individual tax cuts and some of its corporate cuts will expire by 2026 and spending growth will slow notwithstanding the recently approved $1.3 trillion increase in spending. Gale and co-author Alan Auerbach figure that under more realistic assumptions, the national debt in 2028 will exceed Gross Domestic Product.
Are states making big tax changes in the wake of the TCJA? Many states conform their tax codes to the federal tax code, and the TCJA required them to face big tax policy issues quickly. TPC’s Richard Auxier takes a look at their progress and finds that the “somewhat predictable result has been a mix of confusion, uncertainty, and questionable choices.”
Then there’s Nebraska. The state legislature just concluded its session with competing tax reform proposals, and political conflict over state property taxes. Lawmakers will face tough choices upon their return in January. But if a petition drive is successful, Nebraskans will vote in November on $1.1 billion in property tax relief. The referendum calls for taxpayers to get a state income tax credit equal to half of their local property taxes. But there’d be less money available to cover state programs and services—meaning state legislators would likely start the new year with a revenue problem.
Are Opportunity Zones knocking on the wrong doors? Bloomberg Businessweek considers a provision in the TCJA that allows investors who develop real estate or fund businesses in specific geographic locations to receive significant tax breaks. The thing is, the tax incentive “could be used to take affordable housing and convert it into market-rate condos,” says Urban Institute’s Brett Theodos. “It could be used to support payday lenders. Amazon could engineer it into an investment vehicle for HQ2.”
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.
