Who will make the fixes to the TCJA’s glitches? Politico’s Brian Faler reports on the dozens of snafus in the Tax Cuts and Jobs Act, affecting everybody from restaurant owners, hedge fund managers, real estate developers, and farmers. Because Congress rushed a bill through in less than two months, the number and breadth of unresolved issues are unusual, and Republicans are collecting a list that needs to be addressed. But it isn’t certain they can get the 60 votes they’ll need for the Senate to pass a technical corrections bill. Treasury will have the burden of providing regulatory fixes, though it can only write rules that implement the statute, even if it leads to a strange result.
Treasury’s job gets harder: It loses a top tax lawyer. The Wall Street Journal reports (paywall) that Deputy Assistant Secretary for Tax Policy Dana Trier has resigned. Trier, who had been a highly-regarded tax lawyer in private practice and a law professor, has not been shy about publicly identifying flaws in the TCJA. Trier was a key player in Treasury’s efforts to write the TCJA regulations.
In the meantime, businesses are doing what they can to maximize tax breaks. Most are moving slowly, waiting for Treasury to issue guidelines. Pass-through businesses and international areas will likely receive attention first, says Treasury’s Assistant Secretary for Tax Policy (and acting IRS Commissioner) David Kautter. But “We’re at the beginning of a very long and continuous process here,” says Mark Everson, who served as IRS commissioner from 2003 to 2007.
And firms are figuring out how to make the most of used equipment. The Wall Street Journal explains (paywall) how companies may soon cash in on the TCJA’s tax incentive to buy and sell used airplanes and other big-ticket goods. The TCJA allows a business to claim an immediate 100 percent deduction when they buy an asset. That includes used equipment that has already been written off by previous owners.
The Supreme Court sets a date for hearing online sales tax arguments. The big day will be April 17. The issue: Should the High Court reverse its 1992 decision in Quill v. North Dakota? In Quill, the justices said states could require only remote sellers with a physical presence in their state to collect sales tax. That opinion urged Congress to clarify the issue but it never has. In recent years, states have been aggressively looking for ways to collect sales tax. Now, the justices will revisit the issue in South Dakota v. Wayfair, Inc.
Curbing immigration will weaken Social Security. TPC’s Howard Gleckman shares the bottom line of a new Urban Institute study by Damir Cosic and Richard Johnson. They show how a Senate bill that would cut the number of permanent residency visas ( green cards) in half would increase unfunded Social Security obligations by $1.5 trillion, or 13 percent, over the next 75 years. In the nearer term, it would accelerate by one year the date by which the Social Security trust fund is projected to be depleted—from 2034 to 2033.
The US could learn a thing a two from two countries’ fiscal policy decisions. The US, with a projected 2018 federal budget deficit of 4 percent of Gross Domestic Product and an economy running at close to full employment, just enacted a major tax cut. TPC’s Howard Gleckman considers the fiscal policies of Germany and Singapore, both running budget surpluses this year. Germany has no plans to cut taxes, and its public favors more spending or paying back the nation’s relatively small debt. Singapore’s government is proposing a significant tax increase to fund support of its aging population. What are they doing that the US can’t?
Tomorrow on the Hill. The House Ways & Means Committee holds a meeting tomorrow to mark up its views and estimates of the Fiscal Year 2019 budget.
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