Compromising. The House and Senate need to work out some key differences between their versions of the Tax Cuts and Jobs Act. House Majority Leader Kevin McCarthy staked out his ground yesterday: Repeal the corporate alternative minimum tax (which the Senate at the last minute chose to keep in the law), preserve more of the mortgage interest deduction; agree on how quickly to phase out the estate tax; and work out differences in income tax brackets and rates.
Capitulating. The White House seems less interested in the details of a tax bill than in chalking up a win. Director Mick Mulvaney is flexible about whether the President will insist on a certain number of tax brackets in the final tax bill, Mulvaney said, “We favor whatever can pass.” Over the weekend, the President said he’d be OK with a 22 percent corporate tax rate after insisting for months that 20 percent was the maximum he’d accept.
Updating. TPC has a released its analysis of the Senate-passed version of the TCJA. While the Senate made many changes to the Finance Committee bill, average tax changes for households in each income group were essentially unchanged: TPC’s Howard Gleckman explains that the bill remains a big tax cut for businesses and high income households and a modest tax cut for those with low- and middle-incomes—at least in 2019. By 2027, once nearly all individual income tax provisions expire, nearly half of taxpayers would pay more than under current law.
Comparing. TPC also has updated its analysis of the TCJA with a chart comparing current law to the versions passed by the House and Senate.
Discrediting. The New York Times tells the story of how Senate Republicans worked to discredit the congressional Joint Committee on Taxation’s dynamic score of the TCJA. The JCT estimated the bill would add about $1 trillion to deficits over the next decade, contrary to GOP claims that it would pay for itself through higher economic growth. Earlier in the debate, Treasury Secretary Steve Mnuchin claimed a Treasury study would show the same thing. Turned out Treasury staff did no such study.
Dissing. Former Finance Committee Chair Chuck Grassley was asked why the Senate doubled the estate tax exemption to $11 million. He replied, “I think not having the estate tax recognizes the people that are investing, as opposed to those that are just spending every darn penny they have, whether it’s on booze or women or movies.”
Scheduling. Senate Minority Leader Chuck Schumer and House Minority Leader Nancy Pelosi have accepted President Trump’s invitation to meet this Thursday to discuss a year-end agenda. Last time “Chuck and Nancy” tried this, the Democrats cancelled after Trump tweeted hours before the meeting that there would be “no deal.” Will they find a way to prevent a government shutdown on Friday, at least for a few weeks?
Reviewing history: Which tax plan delivered the biggest windfall to the rich? The Washington Post reviews five decades of tax history to determine how the TCJA compares to previous tax overhauls. “There’s just enough competition from the Bush tax cuts, and just enough uncertainty introduced by inflation and patchy data that we can’t declare unequivocally” that the TCJA is the most regressive in the past half-century.
Measuring: The latest IRS Statistics of Income Bulletin is out. The IRS released its Fall 2017 Statistics of Income Bulletin, available here. The publication gives you the most recent data available from various tax and information returns filed by US taxpayers. Some highlights: Among sole proprietorships in 2015, “The largest percentage increase in profits was reported by the real estate sector which [since 2014] increased 15.1 percent or $3.7 billion.”
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, email Renu Zaretsky. 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.
