Can a state prohibit tax credits for scholarship donations to religious institutions? The US Supreme Court will decide whether to uphold a Montana Supreme Court ruling that says “yes.” A group of Montana parents want dollar-for-dollar tax credits for their donations, but the Montana Department of Revenue’s rule prohibits public spending on religious schools. The Montana Supreme Court upheld the state ban.
Treasury issues draft guidance on university excise taxes. The regulations help flesh out a provision of the Tax Cuts and Jobs Act that imposes a 1.4 percent excise tax on net investment income of some wealthy colleges and universities. The levy, dubbed the Harvard tax, is similar to the excise tax on private foundations.
Will the White House index capital gains to inflation? Doing so would exempt investors from tax on asset appreciation due to inflation. The White House reportedly is developing a plan to index gains without congressional approval, which could invite legal challenges. TPC’s Len Burman explains why indexing capital gains to inflation is less than ideal.
President Trump will refrain from imposing more tariffs on Chinese goods. Trump says he had a “great” and “beautiful” time with Chinese President Xi Jinping and announced this weekend that the two would keep talking trade. In addition to holding off on more tariffs on $300 billion in Chinese goods, Trump says he agreed to allow US companies to do business with the Chinese tech company Huawei. His decision reverses Administration sanctions on Huawei due to national security concerns. In exchange for the concessions, Trump says China will buy more US agricultural goods, though it is not known what or how much the nation will purchase.
Sen. McConnell says no to a one-year stop-gap funding bill. The White House favors a one-year measure, but the Senate Majority Leader instead wants to raise spending caps, adopt a two-year budget, and avoid the automatic across-the-board budget cuts (sequestration) that are due to kick in on January 1. Congress almost must pass a spending bill by Sept. 30 to avoid the second government shutdown this year.
It’s July 1, and drivers in a dozen states will pay more at the pump. Gas tax increases went into effect today in California, Connecticut, Illinois, Indiana, Maryland, Michigan, Montana, Nebraska, Ohio, Rhode Island, South Carolina, Tennessee, and Vermont. Increases generally fund infrastructure maintenance and improvement.
Congress is not in session this week in observance of Independence Day. The Daily Deduction will return to its regular schedule on Monday, July 8.
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