Continuous Continuing Resolutions… Senate Appropriations Committee Chair Richard Shelby says Congress may spend the next fiscal year passing a series of continuing resolutions to keep the government open. That’s because of the ongoing fight over President Trump’s efforts to build a southern border wall, including his unilateral move to shift Pentagon funds to the project. “None of us would like that,” said Shelby of the budget uncertainty. “It's not good for the military, it's not good for the administration, it's not good for the Democrats.” Yet here we are.
On the US-China Trade War: So much for that good will farm trip. After meeting with Trump administration officials last week, Chinese trade negotiators abruptly canceled plans to visit farms in Bozeman, Montana and Omaha, Nebraska. The idea had been to build good will by visiting farms that had been hurt by Chinese tariffs on soybeans and pork. China has made vague promises about rolling back tariffs on some US agricultural products. A broader deal between the two countries remains elusive, though the White House continues to promise a new round of talks in October.
Federal judge blocks California law to require Trump to release his tax returns. The judge granted the president’s request to block California’s new law that requires presidential candidates to release five years of tax returns to run in the state’s March primaries. State officials are considering whether to appeal.
Americans are saving after the TCJA. But which ones? The Wall Street Journal reports (paywall) on the uptick in savings after the late-2017 passage of the Tax Cuts and Jobs Act. The saving rate jumped one percentage point in January 2018. Mark Zandi of Moody’s Analytics estimates that the richest 10 percent of Americans account for more than 75 percent of the increase in the post-TCJA savings rate. This suggests that much of the TCJA’s tax cuts are being saved instead of consumed, which may be good for growth in the long run but not in the short-term. Paul Ashworth of Capital Economics noted that the data are starting to support the argument that rising inequality boosts saving and weighs on economic growth.
Surprise! India cuts its 30 percent corporate tax rate. The $20 billion tax cut lowers the nation’s effective rate to 25.2 percent, making it one of the lowest in Asia. New manufacturing companies formed after October 1 will pay a statutory rate of 15 percent, or 17.01 percent with any applicable surcharge — comparable to Singapore. Said a Bloomberg economist: “The tax cuts are likely to boost private investment and have the potential to attract much more foreign direct investment. Any fiscal slippage is likely to be limited in the near term, as stronger tax buoyancy will boost growth.”
For the latest tax news, subscribe to the Tax Policy Center’s Daily Deduction. Sign up here to have it delivered to your inbox weekdays at 8:00 am (Mondays only when Congress is in recess). We welcome tips on new research or other news. Email Renu Zaretsky at [email protected].
