States’ SALT suits… The states of New York, New Jersey, Maryland, and Connecticut have filed a lawsuit in the Southern District of New York challenging the constitutionality of the Tax Cuts and Jobs Act’s $10,000 cap on state and local tax deductions. They call it an “unconstitutional assault on states’ sovereign choices.” Treasury Secretary Steven Mnuchin and Acting IRS Commissioner David Kautter are among the defendants.
Senator Wyden wants a promise from Charles Rettig. The Senate Finance Committee’s top Democrat says he’ll oppose Rettig’s nomination to be IRS Commissioner unless the California lawyer promises to undo IRS guidancethat reduces donor disclosure requirementsfor 501(C)(4) tax-exempt groups. While GOP senators say the guidance can prevent the IRS from targeting organizations for their political leanings, Wyden says it allows anonymous “foreign donors to funnel dark money into nonprofits.”
Tennis, anyone? TPC’s Howard Gleckman considersthe House Ways & Means Committee’s recent passage of 11 separate bills that would add nearly $100 billion to the budget deficit over the next decade. They subsidize gym memberships and high-cost employer-sponsored health insurance, and expand Health Savings Accounts. And they primarily benefit households with incomes between $100,000 to $500,000. They do all this while adding to the national debt at a time when the Congressional Budget Office predicts the debt will approach $29 trillion by 2028. Gleckman explains why these “message bills” seems “like a less than prudent fiscal choice.”
Too soon to know about the TCJA.President Trump insisted after just weeks that the TCJA was a huge success. Democrats insisted it flopped. Yesterday, Fed Chairman Jerome Powell said they both have jumped the gun: It's still too soon to say what impact the Tax Cuts and Jobs Act is having on things like wages,” he told the Senate Banking Committee. "I think it would be early to be looking for a bill that was signed into law less than a year ago to have, to be able to be visibly affecting much of anything, really."
There’s a new plan in DC to transform the EITC. TPC’s Elaine Maag discussestheRainy Day Refund Actthat would encourage the District’s Earned Income Tax Credit recipients to save up to 30 percent of their credits. If they hang on to the money for six months, the District would provide a 50 percent match. Says Maag: “This proposal has the potential to further enhance the EITC as a tool for improving the economic stability of low- and middle-income families.”
And San Francisco voters will get to vote on taxing large companies to help the homeless. The city’s voters will decide in November whether to raise gross receipts taxes by 0.5 percent for companies making $50 million or more in sales. An estimated $300 million in annual revenue would pay for homeless and housing services, twice what the city currently spends.
Tariffs lifted… between the EU and Japan. The European Union and Japan signed a deal yesterday that eliminates nearly all tariffson the products they trade. The countries want to demonstrate “an undeterred determination to lead the world as flag-bearers for free trade.”
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 hereto receive the Daily Deduction as an email newsletter every weekday morning (Mondays only when Congress is in recess) at 8:00 am.
