President Trump says he will impose tariffs on $300 billion in Chinese goods next month. He threatened to impose the 10 percent tariff on almost all Chinese exports to the US starting September 1. That could increase the cost of many consumer goods in the second half of the year. Earlier this week, Trump tweeted that trade talks with China had stalled and any agreement might be put off until after the 2020 elections.
Senate passes budget outline and debt limit delay. The two-year deal, passed by a 67-28 vote, suspends the debt ceiling through July 31, 2021. It lifts Obama-era spending caps and allows for $320 billion in additional military and domestic spending over two years. The deal, already agreed to by the House, boosts overall discretionary spending from $1.32 trillion in fiscal 2019 to $1.37 trillion in 2020 and $1.375 trillion in 2021. The President strongly supported the agreement. However, lawmakers still must approve agency spending bills by the end of September—some of which could still be controversial. One familiar landmine: funding for a southern border wall.
Gone but not forgotten: TCJA’s effect on economic growth. TPC’s Howard Gleckman and Aravind Boddupalli explain how the economic benefits of the Tax Cuts and Jobs Act have petered out. The rate of economic growth peaked in the second quarter of 2018 but has been slowing ever since. The most discouraging outcome: “[F]or the first time since 2016, business investment turned negative last quarter. This slowdown… contrasts sharply with President Trump’s rosy forecast of a long-term investment boom that would lead to annual wage increases of $4,000 or more.”
Wayfair is not so fair to non-sales tax states, say lawmakers. Sens. Ron Wyden and Jeff Merkley of Oregon, and Jeanne Shaheen and Maggie Hassan of New Hampshire introduced a bill this week to prevent small business in one state from being required to collect sales tax on behalf of another state if the businesses have no physical presence there. The bill would also freeze other new remote sales tax laws until 2021 and protect online retailers that generate less than $10 million in sales from collecting the tax.
Inversions are back in style. Sort of. The Wall Street Journal reviews (paywall) the latest trend among multinational corporations: Moving their corporate headquarters back to the US. Since passage of the TCJA, corporations formally located in a low-tax foreign jurisdiction may still have a slight tax advantage. However, with the benefits smaller, some drug makers and others are choosing to come back to the US for reputational reasons.
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