Making the TCJA’s individual income tax cuts permanent. Senator Ted Cruz of Texas has introduced a bill to make permanent the Tax Cuts and Jobs Act’s individual income tax rate reductions. He seeks Democratic support.
Dissolving SALT. In California, Senate president Kevin de Leon has introduced a bill that would allow taxpayers to make deductible charitable gifts to the California Excellence Fund instead of paying some state taxes, now that the federal income tax deduction for such taxes is capped at $10,000. In New York, Democratic proposals to replace individual income taxes with a higher, but deductible, payroll tax for business are running into GOP opposition. And in Congress, New York representatives Peter King (R) and Nita Lowey (D) have introduced a bill to restore the full SALT deduction.
A new Democrat joins the Finance Committee. The election of Alabama Democrat Doug Jones means the party can add one more member to the Finance panel. The choice: Rhode Island’s Sheldon Whitehouse, who narrows the GOP majority to 14-13.
Treasury Secretary Mnuchin: American Samoa and Guam are not tax havens. Mnuchin wrote a letter to the European Union Secretary General this week to dispute the EU’s inclusion of the territories on its tax haven blacklist. Mnuchin wrote, “There is no basis for concluding that American Samoa and Guam have any role in promoting the evasion or avoidance of taxes imposed by European Union member states.” The EU claims that Guam has not applied minimum standards to curb base erosion and profit shifting, and has not signed or ratified “the OECD Multilateral Convention on Mutual Administrative Assistance” on tax matters.
Somebody’ll drink to that… overseas? The TCJA cuts the tax for hard liquor producers from $13.50 per proof gallon to $2.70 per proof gallon. That low rate applies only to the first 100,000 proof gallons. A higher rate hits additional production. As The Washington Post explains, while small distilleries benefit from the plan, so do big importers buying from foreign producers.
Cost of a beer tax cut might be paid by nondrinkers. That’s the worry of some health experts. The TCJA gives brewers a temporary excise tax break, but will reduce government revenue over the next two years by $4.2 billion. NPR explains that those funds could have been used to pay for the costs of excessive alcohol consumption, like traffic accidents, emergency room trips, or poorer health among Medicaid recipients. However, TPC research finds that changes in alcohol taxes may not affect deaths from drinking-related auto accidents.
As for soda in Philadelphia… The beverage industry and the City of Brotherly Love are still battling over the effects of the Philadelphia’s 1.5-cent-per-ounce tax on sugary drinks, enacted a year ago. The industry cites research showing job losses and reduced grocery sales, while the city touts higher revenue for schools and parks.
In Iowa, Governor Kim Reynolds wants tax reform the state “can afford.” The Republican, elected last May, delivered her Condition of the State address yesterday. She called for tax reform that lowers individual income tax rates, eliminates some tax credits, and ends the ability of taxpayers to deduct their federal income tax from their state taxes. But she’s worried about the state’s budget deficit. “We have to focus on what we can afford," she said. "While I want to reduce our uncompetitive corporate taxes, this is not the year."
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.
