House may vote today on the budget deal. House Majority Leader Steny Hoyer announced that the vote would be held today on the $320 billion bipartisan spending and debt limit suspension deal. The Senate plans to take up the measure next week.
Time is running out for tax extender renewal. Bloomberg Tax reports that while the spending and debt deal doesn't include industry-specific expired tax breaks, so-called “tax extenders” could be included in its companion funding bill, due before September 30. How? Congressional leaders could tie together technical corrections, extenders, and the retirement reform package into one deal, speculates Rohit Kumar, former aide to Senate Majority Leader Mitch McConnell.
In the next round of tax reform, look past itemized deductions. That’s TPC’s Eugene Steuerle’s recommendation. Reform efforts have focused on lowering tax rates and broadening the tax base. Steuerle observes, though, that base broadening has typically targeted the most visible tax expenditures--itemized deductions, such as the deductions for mortgage interest and state and local income taxes. But TCJA rolled back those deductions and increased the standard deduction, and itemized deductions now comprise only $70 billion out of the $1.2 trillion of non-business tax expenditures. "Future reformers looking to lower tax rates may have no choice but to look to exclusions, deferrals, tax credits, and preferential tax rates. That, after all, is where the money is.”
Massachusetts lawmakers work on legislation to require tax collection on online sales. Legislators added necessary language to their new state budget proposal this week. The move could generate as much as $42 million in new tax revenue in the new fiscal year that started on July 1. The language requires out-of-state retailers with at least $100,000 in annual sales in Massachusetts to collect and remit the state’s 6.25 percent sales tax on items sold; and online marketplaces would be responsible for collecting taxes on sales made on their platforms by third-party vendors.
In Michigan: If not a gas tax, perhaps a graduated income tax? Democratic Governor Gretchen Whitmer and legislative leaders in the Republican-controlled House have not reached an agreement on the state’s 2020 budget nor found the additional $2.5 billion necessary to fix the roads. Whitmer’s proposed 45-cent-per-gallon gasoline tax has no support among GOP lawmakers. Democratic lawmakers in the House have introduced bills that would create a graduated or progressive income tax. It would generate $2.5 billion in additional revenue. Republicans—and the Michigan Chamber of Commerce—oppose a new tax structure because it would amount, for some, to a tax increase. Voters would need to approve such a tax, as the state constitution currently prohibits it.
Seattle’s soda tax raises more money than expected. The tax, 1.75-cents per ounce of sugary fluid, has been in place for one year, and has generated $22.4 million. That’s 49 percent more that the city’s estimate of $15 million. Moreover, the city budget office expects revenues to be 8 percent higher in its second year and will continue to climb, albeit more slowly, in 2020. The city budget director acknowledges that until the tax went into effect, the city did not know the level of consumption of sweetened beverages. Now, he explained, “with a year’s worth of experience, we think we’ve got this just about right.”
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