The GOP Congress and the President-Elect both want tax cuts, soon, but which ones? The New York Times considers their options (paywall). TPC’s Bill Gale thinks that “the House blueprint seems like the place to start and may be fairly close to where they finish.” MIT’s Robert Pozen (who chairs TPC’s leadership council) wonders whether the new White House would agree to a House-favored territorial corporate tax, which could encourage businesses to shift more profits and jobs overseas in a search for lower-tax territories. And Janice Mays, former Ways & Means staff director and current managing director at PriceWaterhouseCoopers warns that the projected deficits of various tax cutting plans (up to $7 trillion over a decade) could cause internal party strife.
Trump’s Treasury Secretary? As usual at this time in a transition, Washington’s favorite parlor game is speculating about top jobs in the new administration. A few names have surfaced for Treasury Secretary including Steven Mnuchin, who was the Trump campaign’s finance chairman. Mnuchin was a top exec at Goldman Sachs before starting own investment firm. Another, less likely pick: JP Morgan Chase CEO Jamie Dimon—who didn’t publicly support Trump in the campaign and who has said he’d only come to Washington as president. A third name that has surfaced is Rep. Jeb Hensarling (R-Tx). He said if Trump wanted to offer the Treasury job he’d “take the call.”
A recession will come. Will states be ready? TPC’s Norton Francis sketches the landscape. “No state has built a recession into their budget forecast yet. And they may not be prepared for one… the number of states with reserves over 10 percent fell from 21 states in 2015 to 17 in 2016 and is expected to fall to 13 in 2017. This is not a good trend, especially when combined with forecasts of anemic state revenue growth despite economic growth.”
In Germany, the Green Party calls for a wealth tax. A wealth tax “should be "constitutional, productive and feasible,” per the party’s proposal, which also includes an “easy and fair” inheritance tax. The proposal, however, doesn’t include specific tax rates nor a taxable income threshold. The Greens, who came in fourth in 2013 parliamentary elections, hold only about 10 percent of the seats in the Bundestag.
And in India, some are trying to hide their wealth. The government is trying to identify untaxed wealth by abolishing high-denomination currency. The government would require the paper to be deposited in banks, where it would be subject to taxation. To beat the initiative, tax dodging Indians are using non-official channels to convert their “black” money (like buying first-class train tickets with large denominations and getting refunds in smaller denominations). The black market economy in India has always been rather large: Transactions outside formal channels amount to around 20 percent of India's annual $2 trillion gross domestic product.
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