What’s on this year’s tax horizon? The Wall Street Journal reviews (paywall) some of the tax issues Congress may address in its lame duck session. Lawmakers could look at some retirement savings incentives, tax extenders, minor IRS reforms, and technical corrections to the Tax Cuts and Jobs Act. If lawmakers secure bipartisan support, they may be able to add these tax provisions to the must-pass year-end spending bill. They may avoid controversy, though, ditching proposed new limits on IRS use of private debt collectors, a new type of tax-favored savings account, or allowing some tax extenders to finally die.
Then, there is the wall. Of course, if President Trump tries to follow through on his sometimes-threat to shut down the government if he doesn’t get $5 billion in funding for his Mexico border wall, even the modest the tax agenda will fade into irrelevance. With Democrats poised to take control of the House in January, this will be Trump’s last real chance to get the money. But Senate Republicans are wary of a shutdown.
Post Amazon HQ2: Should the federal government stop states from using tax breaks to compete for business? TPC’s Tracy Gordon considers proposals for Congress to curb, or even bar, the use of state and local tax incentives to encourage firms such as Amazon to move facilities. Backers say state and local governments should be prohibited from wasting tax dollars but Tracy notes that states, not the federal government, have jurisdiction over their own land use regulations, Besides, “instead of trying to punish cities for what it considers poor economic development strategy, the federal government could play a more useful role by calmly laying out the facts and giving state and local officials tools to make informed decisions.”
“Hey big spender…” You can give big, too. The Tax Cuts and Jobs Act roughly doubled the estate and gift tax exclusion amount to about $11 million for singles and $22 million for couples (indexed for inflation)—but only from 2018 to 2025. After 2025, the lifetime limit reverts to roughly half as much. But last week, Treasury and the IRS proposed new regs that would allow taxpayers to rely on the new limits for gifts they give through 2025.
Oregon’s about to collect even more marijuana tax revenue. The state’s residents are buying more legal weed than its economists expected. That means Oregon stands to collect about $176 million in pot tax this fiscal year, $12.5 million more this year than expected. The state sales tax is 17 percent and cities and counties can add up to 3 percent more. Even though demand remains… high, the average price of a gram of cannabis fell from $10 in late 2016 to $4 in mid-2018.
Thursday: What will the tax agenda look like next year? A Tax Policy Center program on November 29 may help answer the question. Panelists include former top Senate Democratic tax aide Cathy Koch, long-time GOP Senate Finance Committee tax counsel Mark Prater, former Deputy Assistant Treasury Secretary for Legislative Affairs Sandra Salstrom, and former Treasury Tax legislative Counsel Tom West. TPC’s Howard Gleckman will moderate. The program will begin at 9:30. Register here.
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.
