On the Hill: More trade and tariff talk. The Senate Finance Committee will hear from US Trade Representative Robert Lighthizer on Thursday. He’ll answer questions about President Trump’s plan to tax steel and aluminum imports at 25 percent and 15 percent, respectively. Amb. Lighthizer will testify before the House Ways & Means Committee on Wednesday. Reuters explains how the Trump administration may try to justify the tariffs at the World Trade Organization and how the WTO might respond.
What will tariffs do to the perceived benefit of tax cuts? Bloomberg reports on the University of Michigan’s preliminary figures about Americans’ optimism about current economic conditions. Of consumers who were aware of recent economic changes, 30 percent view Tax Cuts and Jobs Act tax cuts positively. About the same share view tariffs negatively.
So… is a vote against the TCJA a vote for the middle class, or against? The TCJA remains a mid-term election touchstone. Indiana Democrat Sen. Joe Donnelly—up for reelection in November—faces advertising pressure from mega-GOP donors Charles and David Koch. They say his “no” vote on the TCJA means he’s against the middle class getting bigger paychecks. Not surprisingly, a Democratic super PAC responded with an ad saying that his vote supports the middle class by protecting them from growing debt and cuts to Medicare and Social Security. Expect more of this: Nine other senators face reelection this fall.
New tax law, new problems. TPC’s Eric Toder explains how the 2017 TCJA tax cuts “put the final nail in the coffin of a tax reform movement whose major goal was to tax all forms of income equally. We now have in all but name replaced the income tax with a schedular system that applies separate rules to different forms of income.” He goes on to say that this may not be a bad outcome because we can never tax all forms of income, and “… when some forms of income remain tax-free, neither efficiency nor fairness dictates that we apply the same rates to all remaining income.”
In California: Maybe a tax cut on pot and a new tax on guns and ammo sales. Two state Senators, a Republican and a Democrat, have introduced a bill to reduce the state excise tax on cannabis from 15 percent to 11 percent for three years. They hope that the reduction will give legal sellers a leg up in the recreational marijuana market. In the California Assembly, a Democrat introduced the School Gun Violence Prevention Act, which would tax firearm and ammunition sales. Revenue would fund more school counselors. The tax rate has not yet been determined.
Electronic filing news from the IRS. The agency reminds taxpayers that they can now e-file returns, including four just-renewed tax benefits related to incentives for energy production and conservation. The IRS also reminds tax practitioners to maintain and monitor their Electronic Filing Identification Numbers (EFINs) and Centralized Authorization File (CAF) numbers to help safeguard taxpayer data. Cybercriminals sometimes post stolen numbers on the Dark Web as a crime kit for identity thieves who can then file fraudulent tax returns.
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.
