Scrap the ACA’s NIIT and GOP tax reform gets easier. Why? TPC’s Howard Gleckman explains the math (and the politics) behind repealing the Affordable Care Act’s 3.8 percent Net Investment Income Tax. In Washington, Howard notes, “the real price of something is almost always less important than the perceived cost. And cutting the tax rate in a health bill would lower the revenue baseline, making it possible for backers of a deep rate cut to claim it is less expensive than it really is.”
Speaking of the ACA: Another vote? Senate Majority Leader Mitch McConnell says there’ll be a vote on legislation to repeal the Affordable Care Act early this week. But which legislation? It could be the Obamacare Repeal Reconciliation Act of 2017 (repeal of all ACA taxes and mandates) or it could be the latest version of the Better Care Reconciliation act of 2017 (repeal some ACA taxes and replace with tax credits). Either way, it’s not clear that McConnell has the votes needed to start debate.
Also on the Hill this week. Perhaps a House vote on the fiscal 2018 budget resolution? The House Ways & Means Oversight Subcommittee holds a hearing tomorrow on how the IRS manages electronic records. Also tomorrow: A House Judiciary Committee hearing on the No Regulation Without Representation Act of 2017, which would prevent states from levying sales tax on individuals who do not have a physical presence within state borders. The Senate Appropriations Financial Services and General Government Subcommittee holds a hearing Wednesday on Treasury’s fiscal 2018 budget request.
Is the state and local tax deduction not long for this world? The federal deduction for state and local taxes is on the chopping block under plans from House GOP leadership and President Trump. Tax Analysts economist Martin Sullivan notes that “cutting this tax break would almost be fun for them… [since] it provides massively disproportionate deductions to high-tax states controlled by Democrats.” Thing is: Those states still elect Republican lawmakers. GOP Rep. Tom MacArthur of New Jersey said, “People in high-tax states under the plan they're proposing would basically be at a break-even while everyone else in the [country] enjoys tax relief. That's not fair."
Governor Christie: No occupancy taxes on rentals in the sharing economy. The New Jersey Republican vetoed Democratic-sponsored legislation that would have allowed municipalities to levy sales and use taxes, including occupancy taxes, on short-term rentals booked through online platforms. By taxing those rentals as hotels are taxed, the legislation could have generated over $6 million in new tax revenue for the state and municipalities. Christie said that tax would be bad for the economy.
Should San Francisco tax its vacant buildings? One city supervisor thinks it’s a good idea, and wants legislation to impose a vacancy tax on large commercial and residential property owners who leave units empty and forego rental income. Supervisor Aaron Peskin receives complaints about the negative impact of “ghost buildings” in neighborhoods, and thinks a vacancy tax could encourage property owners to find tenants. Other cities have tried it, like Vancouver, British Columbia, Washington, DC, and some in France and Australia. It’s too soon to tell whether the taxes have increased rentals.
If only Milwaukee could try that… A new report from the Public Policy Forum commissioned by the Greater Milwaukee Committee finds that Wisconsin’s largest city is unique among cities with populations between 300,000 and 1 million in having only property tax as its only source of local revenue. Wisconsin is the only state in the Midwest that limits municipalities—regardless of size—to the property tax as a local revenue source. Most of the other 38 cities studied levy general sales taxes or selective sales taxes on entertainment or food and liquor. The report finds that state aid is a minor source of revenue for most of those cities, but accounted for 48 percent of Milwaukee’s intergovernmental and local tax revenues in 2015.
