There’s still no deal on a temporary spending bill for the federal government. Funding expires at midnight tomorrow. House conservatives hint they’ll back another short-term spending bill to keep the government’s doors open until February 16. The House may vote as soon as today. But it is not clear if Senate Majority Leader Mitch McConnell can find 10 Democratic votes he’ll likely need to avoid a shutdown. The budget bill needs 60 votes to pass the Senate. The current GOP bill would extend a popular children’s health insurance program for six years and delay some Affordable Care Act tax increases, but it doesn’t address the contentious immigration issue.
TCJA gives significant tax benefits to employees-turned-contractors. TPC’s Steve Rosenthal explains. “Many moderate-income workers may be able to exploit a tax break that higher-income workers cannot. And by shifting their status from employee to contractor, workers potentially can reduce their taxes by thousands of dollars.” That’s because of the Tax Cuts and Jobs Act’s 20-percent individual income tax deduction for pass-through business income does not apply to wages and salaries. But the special deal phases out for some pass-throughs as their owner’s income rises.
Apple pays, hires, and expands. The tech giant will pay $38 billion in taxes from profits earned overseas thanks to the new tax bill. The company also plans to buy $55 billion from domestic suppliers, hire 20,000 new US workers, and pay many employees a $2,500 bonus in restricted stock. Apple currently employs 84,000 people across the country.
Unfunded state pension plan fights aren’t going to cool off anytime soon. States that need to meet steep unfunded pension obligations, like Illinois, Kentucky, Connecticut, and New Jersey, may have a harder time as a result of the TCJA, explains Robert Pozen of MIT. Pozen, TPC’s Leadership Committee chair, says “The new federal restriction on SALT deductions will open up a new window on reforming state benefit plans with large unfunded liabilities. [V]oters…will probably oppose tax increases and service cuts… Instead, they will pressure elected officials to renegotiate benefit plans to the extent legally permissible.”
Maryland may join those states looking to push-back against the SALT deduction change. Democrats, who control the legislature and GOP Governor Larry Hogan all say they want to protect Marylanders from the TCJA’s limit on the SALT deduction. But can they agree on how?
Michigan’s Senate overrides Governor Snyder’s veto and approves tax cuts. The governor had vetoed a tax break on vehicle trade-ins, but the Senate overrode the veto this week. Snyder had called the tax break “not fiscally prudent.” If the House also votes to override, the sales tax break for trade-in will increase. The Senate also voted to increase the state’s personal exemption. The bill also goes to the Michigan House.
Popular support for the TCJA grows. Recent polling by The New York Times/SurveyMonkey, and Politico/Morning Consult shows more support for the TCJA as awareness of tax cuts grows. The Times shows 46 percent approve of the bill, while Politico shows 45 percent approve.
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.
