Maybe it’ll be a trade tiff, and not a war? The White House is moving quickly to solidify a tariff proclamation on imports in the tumultuous wake of President Trump’s announcement of a 25 percent tariff on steel and 10 percent tariff on aluminum. CNN reports that “officials say Trump has listened carefully to the criticism of his announcement and concede it's likely that the final plan won't apply the same tariffs to every country.” Officials expect to release a proclamation this week or next, which, per Trump, will be "loving." Those officials will not likely include Gary Cohn, who advocated against tariffs. News of his resignation as the director of the President's National Economic Council broke late yesterday.
Tune in this morning: How do estate and inheritance taxes affect entrepreneurship? TPC’s webcast event on taxation wealth, taxation, entrepreneurship and philanthropy starts at 9:00. Key on the event reading list: A new TPC brief (and paper) by Len Burman, Robert McClelland and Chenxi Lu. They present new evidence that “receiving an inheritance increases the likelihood of owning and managing a business. The prospect of leaving an estate subject to taxation may reduce the likelihood of continued self-employment by encouraging retirement.”
The Trump Administration says states should be able to tax online retailers, no matter their physical location. Solicitor General Noel Francisco weighed in on the appeal by South Dakota to the US Supreme Court. South Dakota wants the high court to overturn its 1992 ruling that companies without a physical presence in a state are not required to collect a state sales tax on purchases. Francisco writes in a brief: “A physical-presence requirement ... bears no logical relationship to current economic conditions, and imposes intolerable burdens on the states’ ability to collect tax revenue they are lawfully owed.”
New York State wants to tax online purchases. Democratic Governor Andrew Cuomo, seeking to close the state’s $4.4 billion budget gap has proposed an "internet fairness conformity tax" in his executive budget. It would require online marketplaces to collect sales tax from third-party sales to New York residents, and would generate $75 million this year and $150 million a year for the next three years.
Missouri House committee considers an income tax cut and streamlined sales and use tax. The Republican-sponsored measure would reduce top state income tax rates on individuals and corporations, currently at 5.9 percent and 6.25 percent respectively, to 5 percent each. The measure would also have the state join the multi-state Streamlined Sales and Use Tax Agreement, placing Missouri-based retailers on the same footing as online retailers; Missouri retailers would have to collect sales tax wherever they deliver purchased products.
In New Jersey: Instead of millionaires, tax corporations. Democratic state Senate President Stephen Sweeney proposes a 3 percent state surcharge on corporate income to help fund public schools. The corporate surcharge would generate $657 million in annual corporate tax revenue, about the same as what a “millionaire tax” to be proposed by Democratic Governor Phil Murphy, could generate. The millionaire tax has lost some popularity in the wake of the $10,000 cap on state and local tax deductions enacted under the federal Tax Cuts and Jobs Act.
Conservative groups and some GOP lawmakers say the OMB needs to do more to review IRS regulations. They want the White House Office of Management and Budget to provide more review of IRS regulations. They also call for the IRS to complete cost-benefit analyses of their regulations to determine how they will affect the economy. Additional review and analyses would add time before regulation could go into effect, and Congress, through the Joint Committee on Taxation, already estimates how much revenue the federal government would gain or lose due to tax changes. TPC’s Mark Mazur, former assistant Treasury secretary for tax policy, said, “The practitioners, they want the guidance. They don’t want it in six months, they want it now.”
An omnibus bill that deals with the grain glitch? House Majority Leader Kevin McCarthy indicated the chamber could vote on a $1 trillion omnibus spending package as early as next week. That would give the Senate time to approve it before the government runs out of funding on March 23. The bill may include a provision that would correct an error that allows for favorable tax treatment of grain cooperatives under the TCJA, reports TaxNotes (paywall).
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.
