The big tax reveal…or another failed launch? This is supposed to be the week that President Trump and congressional Republicans roll out their latest tax reform plan. But details remain sketchy and the unveiling will have to compete for attention with a possible Senate vote on the Graham-Cassidy bill to replace the Affordable Care Act, a hot Alabama Senate GOP primary contest, and the president’s increasingly heated war of words with North Korea, a growing list of high-profile professional athletes and, seemingly, nearly all of the National Football League. In that environment, will anyone even notice the tax plan, especially if it lacks key details?
Thus, tax cut talks continue. According to multiple reports, Republicans are setting sights on a 20 percent corporate tax rate and a 25 percent rate on pass-through businesses. However, the president continues to say his goal is a 15 percent business rate and, he added yesterday, he wants to bring the individual rate down to "10 or 12 percent." GOP tax cutters continue to try to make the case that tax cuts boost economic growth. Not surprisingly, they seem to be ignoring the four rules for tax reform suggested by Former Treasury Secretary Jack Lew.
Will business tax cuts boost US incomes through new foreign investment? TPC’s Ben Page considers the impact of tax cuts on foreign investment in US companies. While equity investments and lending can increase domestic output by US firms, foreign investment may not boost the pre-tax incomes of Americans as much as tax cut supporters claim. That’s because US firms must distribute new profits and pay interest to those foreign investors.
About that individual income tax rate. Republicans reportedly are considering a cut to the top individual income tax rate from 39.6 percent to 35 percent. Treasury Secretary Steven Mnuchin says that such a move would not break his promise of “no absolute tax cut” for the wealthiest households. He tells CNN “It was never a pledge...It was what the president's objective was.”
As for ACA repeal: A hearing and some fine tuning? The Senate Finance Committee will hold a hearing this afternoon on the Graham-Cassidy bill that would repeal the Affordable Care Act and many of its associated taxes and replace it with block grants to states. GOP senators John McCain and Rand Paul say they will not support it, Susan Collins says, “It is very difficult for me to envision a scenario where I would end up voting for this bill,” and Ted Cruz says he’s a “no” at least on the bill as written. If a total of three Republicans oppose the measure, it will die. Health and Human Services Secretary Tom Price insists the bill is not doomed and may be revised.
Oklahoma lawmakers return to try to solve budget impasse. The state budget has a $215 million shortfall and a special legislative session to address the three-year problem starts today. A $1.50 per pack cigarette tax was supposed to ease budget woes, but the Oklahoma Supreme Court ruled it unconstitutionally enacted and nullified it.
