Congress is in recess until September 8. The Daily Deduction will next appear on Tuesday, September 2. It will resume its regular schedule on Monday, September 8. Individual tax rates: If you cut them, what will grow? Representative Paul Ryan, who is likely to become the next chair of  the House Ways and Means Committee, wants to cut the top individual tax rate because he’s a “classic growth conservative.” But what might such a cut do to the deficit? TPC’s Howard Gleckman describes TPC’s latest estimates. “A one percentage point cut in the top rate would add $108 billion to the deficit over 10 years. Nearly all the benefit would go to those making $1 million or more.” An across-the-board 1 percent rate cut would add $662 billion to the deficit. Is the US corporate tax rate really so bad? In a new paper, Ed Kleinbard of the Gould School of Law at the University of Southern California says “no.” While the US statutory corporate tax rate is among the highest in the world at 35 percent, the average effective  rate is just 12.5 percent, in part because  $2 trillion in offshore earnings are not subject to US tax. Kleinbard argues that offshore money is not, as corporations would suggest, “trapped.” Since a US multinational can use interest earned on offshore profits to offset its US interest expense, the tax code leaves a firm “in the same economic position as if it had simply repatriated the cash tax-free.” But inversions remain. So does the need for corporate tax reform. Reincorporating overseas for a lower tax rate might be a great deal for corporations, but it’s not always so great for shareholders. Treasury Secretary Jack Lew has made it clear that while the Administration would like to see business tax reform or retroactive legislation to curb corporate inversions, it may act on its own without waiting for Congress. The Treasury may make a move to limit them as early as next month. Hollywood or bust? North Carolina isn’t interested in giving film producers a 25 percent refundable tax credit anymore. It joins Florida, New Mexico, and Wisconsin in cutting film industry tax incentives. Arizona, Idaho, Indiana, Kansas, Nebraska, North Dakota and South Dakota have ended tax breaks for filmmakers, too. Meanwhile, the pressure is on Democratic Governor Jerry Brown to quadruple California’s tax incentives for the film industry. But with fewer subsidies in other states, do producers really need them in California? Also on the entertainment front….Philadelphia Mayor Michael Nutter has abandoned administrative efforts to tax lap dancing after a local judge ruled he didn’t have the authority to impose such a levy. Instead of appealing, Nutter may throw the issue into the lap of the city council. Will Congress extend the Mortgage Forgiveness Tax Relief Act? The credit, which  expired December 31, 2013, would offset the tax bills of any Bank of America borrowers who accept a loan reduction as part of the bank’s $16.7 billion settlement with the US Department of Justice for financial fraud. If the bill stalls in Congress, BofA has to set aside $490 million to cover its borrowers’ tax bills. If Congress makes the credit retroactive for 2014 and available in 2015 for all eligible taxpayers, it would cost the Treasury $5.4 billion, according to the Joint Committee on Taxation. Meanwhile, tax expenditures for asset building, like homeownership, are expected to grow. The latest Tax Fact from TPC’s Gene Steuerle and Caleb Quackenbush shows that asset-building tax subsidies cost more than $370 billion in 2014 and are projected to grow to more than $500 billion annually over the next 5 years. The South likes sales tax holidays. The latest data from the State and Local Finance Initiative maps the geographic clustering of the holiday. Sales tax holidays make little sense as tax policy, since they’re more beneficial to affluent shoppers and don’t encourage additional spending to boost economic growth. They may, however, prompt consumers to stock up on supplies for hurricane season—a good plan in Southern or Gulf states. Interested in subscribing to The Daily Deduction, the Tax Policy Center summary of the day’s tax news? Sign-up here for free access. If you’d like to tell us about a new research paper or have any comments about our new feature, write us at [email protected].