Tariffs and a prolonged trade war may not be having the impact President Trump intended. The manufacturing sector contracted by 1.9 percent in the first quarter of 2019, by 1.2 percent in the second quarter, and by an estimated 0.4 percent in the month of July. A recession occurs when the entire economy contracts in two consecutive quarters.
Castro’s tax plan. Democratic presidential hopeful Julian Castro has rolled out a plan to expand tax credits for low- and moderate-income households and create new universal pre-K education and child care. He’d pay for it with an inheritance tax on bequests of $2 million or more, by raising the capital gains tax rate for those making $400,000 or more, taxing unrealized gains of those with $40 million or more in assets, and by repealing the TCJA.
Ninth Circuit affirms Tax Court’s support of Amazon in transfer pricing case. At issue: Amazon’s interpretation of the term “intangible property.” As TaxNotes explains (paywall), “the court held that the definition includes only intangibles that — unlike residual business assets like goodwill and going concern value — can be transferred independently.”
Why can’t we just pass a carbon tax? TPC’s Howard Gleckman reviews the findings of a new National Bureau of Economic Research (NBER) paper that explains. A carbon tax is an effective tool to combat climate change, and it appears popular in public opinion polls but actual voters react ideologically and give little weight to the benefits of a carbon tax, including promised tax rebates. Gleckman concludes “If supporters of what seems to be an effective solution to an existential problem are going to turn their ideas into policy, they are going to have to tell a much better story.”
A majority of Oregon voters would back a health care tax,--with big caveats. A new statewide poll finds that 62 percent of Oregon voters would “probably" or “definitely” vote for a health care tax to provide care for everyone in the state. But the support comes with two huge caveats: They want the tax to be lower than what they currently pay in insurance premiums and out-of-pocket expenses, and they want employers to keep contributing about the same portion of employee cost as they do now.
For low- and middle-income families, the net benefit of the TCJA’s Child Tax Credit is small. In her new research report, TPC’s Elaine Maag compares benefits of federal tax law for families with children with and without changes enacted under the Tax Cuts and Jobs Act. The TCJA increases benefits for very low-income families by as little as $75. Making the CTC fully refundable, phasing it in more quickly or providing the full credit without any phase in would increase benefits for low-income families.
How the TCJA affected state individual income taxes. A new article by TPC’s Erin Huffer, John Iselin, Frank Sammartino, and David Weiner, published in the Washington University Journal of Law & Policy, analyzes the effect of the TCJA on state individual income taxes. States that adopted the TCJA’s bigger federal standard deduction and elimination of the federal personal exemption saw little change in their own taxes. But states that link to only one of the elements will see more dramatic changes.
Trump’s new curbs on immigrants receiving public benefits will hurt taxpaying workers. TPC’s Aravind Boddupalli explains what’s wrong with the Trump administration’s new public charge rule that will limit immigration for people likely to need public benefits. It misses two important points. First, nearly all immigrants pay US taxes. Second, immigrants are less likely to receive public benefits than native-born citizens.
How can the federal government best support struggling cities? TPC’s Tracy Gordon says federal policymakers need to take a creative, cooperative approach that benefits not just big cities but small and mid-sized communities that are falling behind in a world less reliant on regional economic hubs than on global supply chains. In contrast with recent name-calling over Baltimore, when levels of government work together smoothly and efficiently, everyone benefits.
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