Economic growth slowed in 2019. The Commerce Department reports that Gross Domestic Product grew at a 2.3 percent annual rate in 2019, the slowest pace in four years. The Trump administration promised that the 2017 Tax Cuts and Jobs Act would create an economic boom, driven largely by business investment. But purchases of structures and equipment have sagged, partly due to higher tariffs and fears of a growing trade war. Overall growth in 2019 was slightly lower than in 2017.
Could a VAT tax the rich and fund a universal basic income? TPC’s Bill Gale thinks so. He elaborates on his solution in a Hamilton Project paper: a 10 percent Value-Added Tax (VAT) combined with a universal basic income (UBI, effectively a cash payment to every US household). Gale figures the plan would raise substantial net revenue, be very progressive, and be as conducive to economic growth as any other new tax. TPC estimates it would increase after-tax income of the lowest-income 20 percent of households by 17 percent. The tax burden for middle-income people would be unchanged while incomes of the top 1 percent of households would fall by 5.5 percent.
Walmart does not have to collect local sales tax on its online third-party sales. The Louisiana Supreme Court ruled that the company is not a “dealer” under Louisiana law, and its Marketplace Retailer Agreement does not transfer a third-party retailer’s tax obligation to Walmart. The ruling could have implications for other states looking to require online marketplaces to collect tax for participating retailers.
Could a tax on digital ads fund public education? Maryland lawmakers are exploring the possibility of taxing online tech giants like Facebook and Google. But Matt McDermott, president of the American Advertising Federation of Baltimore, said the bill waves a “bazooka” at local companies. State senators are forming a work group to develop a detailed proposal.
Arizona voters may decide which tax increase (or both, or neither) will boost school funding in November. One bill moving through the state senate would raise the 0.6-cent sales tax to a full penny and generate an additional $580 million a year in tax revenue. Advocates are trying to get an alternative on the November ballot. It would raise $490 million annually with a surcharge on income exceeding $250,000 for individuals and $500,000 for joint filers.
In Washington State: A bill to let King County tax big businesses with highly paid employees. The idea: Fund affordable housing, public safety, homeless services, and behavioral health. The bill would allow the county to tax large businesses with employees who earn at least $150,000 a year. Seattle Mayor Jenny Durkan and King County Executive Dow Constantine estimate that the bill could raise $121 million per year. Expedia backs the measure. Amazon declined to comment. In 2018, Seattle passed a head tax on many of the same firms, but it was quickly repealed under pressure from Amazon and others.
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