Where will the health bill go from here? Early this morning, the GOP-controlled Senate failed once again to pass a replacement for the Affordable Care Act. By 51-49, lawmakers rejected the so-called "skinny repeal," a measure that would have retained nearly all of the ACA's tax increases and its Medicaid provisions but repealed its individual and employer mandates. It is not clear what happens next, but one thing is certain: Those ACA taxes will remain on the books for at least a while longer.
The Big Six has principles, but no plan. The Big Six--including House Speaker Paul Ryan, Senate Majority Leader Mitch McConnell, Senate Finance Committee Chairman Orrin Hatch, House Ways and Means Committee Chairman Kevin Brady and top Trump aides Steven Mnuchin and Gary Cohn--issued a statement yesterday that kills the border adjustment tax and sets out a vague set of principles for a tax bill. The group, which has been quietly negotiating a bill behind closed doors, issued a brief statement that calls for rate cuts, expensing of capital equipment, repatriation of foreign earnings, and permanent tax cuts, but never says how they’d be paid for. TPC’s Howard Gleckman explains.
A certain corporate tax cut probably won’t cut it. TPC’s Mark Mazur told MarketWatch that if the Trump Administration wants to bring the corporate tax rate down from 35 percent to 20 or 15 percent, they’re “either not doing it in a fiscally responsible way or [there’s an] additional revenue source that’s not been fully described yet.”
Confirmed, given what we know: The President’s tax plan would add trillions to the deficit. The Penn-Wharton Budget Model, which includes macroeconomic effects, closely tracks a TPC projection released earlier this month. It projects effects of a plan consistent with what the Trump Administration outlined in April, and finds it would reduce federal revenues by about $8 trillion over the next decade. If the Administration outline is combined with a package of possible revenue-raisers suggested by the president, it would still lose nearly $4 trillion over the period. With or without revenue raisers, Wharton found the Trump tax plan would reduce revenue by even more than TPC estimated over either a 10- or 20-year period.
Congress may like CBO after all. The Republican-controlled House resoundingly defeated Freedom Caucus attempts to slash funding for the Congressional Budget Office. One measure to cut the CBO budget in half failed 107-314. A second, to abolish the agency’s budget analysis division, failed 116-309. Ways & Means Committee chair Kevin Brady strongly defended the agency.
Let’s talk about the Laffer Curve. Even after decades of controversy, the topic underlies many of today’s tax policy debates. Do federal tax cuts “pay for themselves” or boost states’ economies? The latest episode of TPC’s new podcast, Taxology, host Kathy Schalch chats with TPC’s Kim Rueben and Bill Gale about the theory behind the Laffer Curve and the evidence supporting the claims.
GAO to IRS: Work yet to do on security. A fiscal 2016 audit from the Government Accountability Office finds that the IRS has made some progress addressing prior GAO information security recommendations. But the IRS still needs to strengthen its systems to protect sensitive data and prevent unnecessary exposure to identity thieves and others. The GAO waits for the IRS to fully address 166 of its recommendations.
Pennsylvania’s Senate sends a revenue package to the House. Yesterday the Senate approved by a 2-vote margin a $2.2 billion revenue package designed to balance the state’s $32 billion spending plan. The package contains new taxes and a tax rate increase, including a natural gas extraction tax that would raise $970 million.
Indiana’s tax caps prove costly to its local governments. Indiana voters amended the state constitution in 2010 to set a 1 percent cap on residential property taxes, 2 percent cap on farm ground taxes, and 3 percent cap on business property taxes. That has saved Indiana property owners $38.7 million this year, but local governments are reducing spending on services as a result. The only option available to raise any needed revenue: Local income taxes. Will they make that choice?
