Tax Reform 2.0? “Um… No,” say some campaigning Republicans. Politico reports that some Republicans running for reelection in suburban districts in high-tax states would rather not extend tax cuts before voters head to the polls in November. Those GOP members voted against the Tax Cuts and Jobs Act in December because the bill caps the state and local tax deduction s for many of their constituents. “If we were to pass [Tax Cut 2.0] here in the House, it would be an exercise in futility, because it could never pass in the Senate,” said one lawmaker in political jeopardy, Rep. Leonard Lance of New Jersey.
“Stop BEZOS Act?” Counterproductive. TPC’s Len Burman explains why the bill introduced last week by Sen. Bernie Sanders and Rep. Ro Khanna would hurt low-wage workers more than it would help them. “The same market forces that depress wages for low-skilled workers would ultimately undermine the Sanders/Khanna bill, harming many of the workers that they want to help.” A far better option? “[E]xpand the earned income tax credit, which Khanna has worked hard for."
Treasury should review IRA rules, but any likely changes would help only a few seniors. In an executive order, President Trump directed Treasury to review the rules surrounding Required Minimum Distributions (RMDs) for traditional Individual Retirement Accounts and 401(k) plans. The intention: Give seniors the ability to stretch out their savings by requiring them to take out less. But TPC’s Howard Gleckman explains that few seniors would get more than $100 in annual tax savings. “Nearly half of American retirees say they have less than $100,000 in retirement savings. Many low- and moderate-income retirees already withdraw more than the legal minimum to help pay living expenses… Those who use big-dollar retirement accounts as estate planning vehicles would the real winners from the changes Trump is suggesting.”
Trump’s Tariffs: China Edition. The president threatened to impose new trade sanctions on an additional $267 billion in Chinese goods—effectively the remainder of China's imports to the US. These would come on top of previously announced tariffs. Meanwhile, Apple Inc. said those additional import taxes could result in price hikes on some of its products. Trump responded by telling Apple to build the gear in the US.
Germany to EU: More time to debate the digital tax, please. German Finance Minister Olaf Scholz says he thinks the European Union can still come to an agreement on the European Commission’s proposal to charge a 3 percent levy on digital revenues of large companies like Google and Facebook. It just might take till the end of the year. The German government wants assure that a digital tax will not harm its auto manufacturers.
France to the US: This isn’t [only] about you. French Finance Minister Bruno Le Maire told CNBC that the United States should not view the proposed EU digital tax as an attack on the US. “Fair taxation is not taxation against the United States…” noting that the digital tax would apply to European as well as US companies. He’ll propose phasing out the digital tax over time in an effort to compromise with other EU countries. He also noted that it “is the United States that has decided to put tariffs on European goods, not the contrary."
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.
