The TCJA and the States: Today at 9:00 am: The Tax Cuts and Jobs Act is creating many fiscal challenges for the states. To explain how they may respond, TPC’s Howard Gleckman will moderate a discussion with Sandra Beattie of the New York State Division of the Budget, John Hicks of the National Association of State Budget Officers, Laura Wheeler of Georgia State University, and Kim Rueben of TPC’s State and Local Finance Initiative. Watch the live webcast today.
Some pre-event homework on how states may respond to the TCJA. TPC’s State and Local Finance Initiative has a new paper that describes how state tax systems are tied to federal law, and what they TCJA may mean for them. Authors Richard Auxier and Frank Sammartino show how previous federal tax changes affected states and how the TCJA differs from the Tax Reform Act of 1986.
Delaying ACA taxes comes at a steep price. The Joint Committee on Taxation released its estimate yesterday of the cost of tax changes in the stopgap spending bill passed this week. The bill delays for two years the Affordable Care Act’s medical device tax and the “Cadillac” tax on high cost health plans. It delays for one year the health insurance tax. Together, these changes will reduce federal revenue by $31.3 billion over ten years.
Companies continue to report TCJA benefits. Verizon Communications reports an expected windfall of $3.5 billion to $4 billion in additional cash flow thanks to the TCJA. JPMorgan Chase says it will build 400 new branches, raise wages for 22,000 workers, and boost small business lending and charitable giving. Detroit’s DTE is the latest electricity provider that plans to reduce rates in light of the TCJA.
Infrastructure bonds. A leaked version of a draft White House infrastructure plan includes extensive use of private activity bonds and advanced refunds by state and local governments. That’s interesting since the just-passed tax bill killed advanced refunds and the House version would have ended all private activity bonds. PABs eventually survived, but Congress doesn’t seem to love them. And the Trump Administration once backed the House bill. It is sometimes hard to keep up.
More please. Always looking for another tax cut to promote, Americans for Tax Reform president Grover Norquist wants the Treasury to index capital gains for inflation before they are taxed. Somewhat surprisingly, the $1.5 trillion in TCJA tax cuts didn’t include any reduction in taxes on investment gains, not even a rollback of the ACA’s net investment income tax. Norquist insists Treasury can make the change administratively.
Will Singapore raise its taxes even more? The city-state has some of the lowest tax rates in the world, even after raising its top income tax rate from 20 to 22 percent in 2015. However, government officials expect the 2017 budget deficit will be the largest in the past 16 years. And Singapore soon expects to be home to as many people over age 65 as under 15: The senior population may double by 2030 and social spending will need to grow to keep pace. The government wants to raise taxes, but citizens prefer tapping the nation’s cash reserves.
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.
