Senator John McCain has died. The senior senator from Arizona passed away on Saturday. He spent much of his 30+ years in the Senate trying to control the influence of money in public life. While taxes were not a big piece of his policy agenda, McCain proposed an ambitious cap-and-trade plan in his 2008 presidential campaign. The man who defeated him, Barack Obama, eventually backed a similar idea but the plan died after failing to win much support in Congress.
Why did Manafort and Cohen get away with their tax and campaign finance crimes so long? Enforcement matters. The Washington Post explains how President Trump’s former campaign manager Paul Manafort and former personal attorney Michael Cohen, now both convicted felons, were able to get away with their tax fraud and campaign finance violations for many years. “Decisions by policymakers and lawmakers to defang regulation and defund investigations, particularly through political pressure aimed at the Internal Revenue Service, helped the behavior to go unnoticed.”
Sorry, charitable taxpayers: Your contributions will still come with SALT. TPC’s Steve Rosenthal explains how new Treasury regulations discourage taxpayers from contributing to new state-run charitable funds in lieu of paying some taxes. Such funds, set up in New York and some other states, would have allowed taxpayers to skirt the $10,000 cap on state and local tax deductions enacted under the Tax Cuts and Jobs Act. The new guidance also could limit federal tax benefits for older state credit programs for private schools. “Of course,” Rosenthal concludes, “Comments on these proposed regulations will be accepted in the coming weeks, meaning changes still could be made. So, stay tuned.”
Fallout from the SALT guidance. New Jersey’s Democratic Governor Phil Murphy says he may sue. Groups that support school vouchers are very unhappy, and groups that back public schools seem pleased. Will Congress step in, and what will it do?
New paper from TPC on revenue and distributional effect of TCJA mortgage cap. Conventional estimates of the size and distribution of the mortgage interest deduction (MID) do not fully account for responses in household behavior, such as selling stocks or bonds in a portfolio to pay down mortgage debt. This new paper by Austin Drukker, Ted Gayer,and Harvey Rosen, uses a framework that allows for the possibility of taxpayer rebalancing his or her portfolio, and finds that the TCJA’s reduction in the eligible mortgage cap is unlikely to have much impact on either the revenue or distributional implications of the MID.
Save the date: September 25 Capitol Hill Policy Briefing on the EITC. Each year, the Earned Income Tax Credit helps nearly 26 million working Americans keep more of their income, and serves as one of the most effective anti-poverty tools in the tax code, lifting 6 million people out of poverty. What if it were expanded? Tax Credits for Workers and Their Families hosts a briefing on the topic on Tuesday, September 25, from 10:00 am to 11:00 am. Panelists include Jill Hunter-Williams, Legislative Director for Congressman Danny Davis (D-IL); TPC’s Elaine Maag; and Robin McKinney, CEO of the CASH Campaign of Maryland. You can register here for the event.
The Daily Deduction will return to its regular schedule on Tuesday, September 4.
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.
