Harvey relief, temporary government funding, and a debt-ceiling bump. The House passed by overwhelming majority a $7.9 billion aid package for Hurricane Harvey relief. But just after House Speaker Paul Ryan pooh-poohed the idea of tying a short-term debt ceiling hike to the Harvey money, President Trump backed it. Not only that, he wants Congress to add a three-month government spending bill to the package. Senate Majority Leader Mitch McConnell immediately agreed. It would be a clear win for Senate Democratic Leader Chuck Schumer and House Democratic leader Nancy Pelosi and an embarrassing defeat for Ryan and the conservative House Freedom Caucus.
There is little public enthusiasm for a corporate rate cut. A new Politico/Morning Consult poll finds that only one-third of respondents favor cutting the corporate tax rate to 15 percent, as the president has proposed, and 60 percent say corporations already pay too little in taxes. On the other hand, two-thirds say Congress should cut the tax rate on “small business” to 15 percent.
A tax cut for Harvey victims? House Ways & Means Committee Chair Kevin Brady thinks one is on the horizon. Brady, who represents part of the Houston area, predicts a small tax measure that could expand a deduction for casualty losses, allow penalty-free hardship withdrawals from retirement accounts, and create new incentives for charitable giving.
The House hopes to pass a budget next week, too. House Budget Committee Chair Diane Black of Tennessee is hopeful the votes are there though she has been trying unsuccessfully to round them up for months. Even without a budget, the House passed four spending bills in July and expects to pass eight more this week. However, most of the funding bills face an uphill battle in the Senate.
Using the “current policy baseline” for tax reform: Realistic or not? In a new paper, the liberal Center for American Progress notes that Republican leaders want to use it to enable over $400 billion in tax cuts. Some say a current policy baseline that assumes Congress would retain expiring tax provisions is a “more realistic view” of the tax code. But two years ago, when working to pass the Protecting Americans from Tax Hikes (PATH) Act, some of the same lawmakers carefully chose which temporary tax provisions to make permanent and which would expire.
About that relief package… It isn’t being offset by other spending cuts and TPC’s Gene Steuerle wonders who among taxpayers should pay for disaster relief or, or for that matter, any government services? The problem, Gene notes, are the many who claim special tax treatment. Who, Gene asks, should be “exempt from the social compact that says we should use our tax dollars to assist victims of an historic flood they could not predict or plan for? Once one broadens this question to include helping victims of poverty or poor health, or paying some share of the cost of our national defense, it lays bare the issue of who should pay taxes.”
About your retirement… Or anybody’s, really. The Tax Hound returns with a look at Americans’ faith in the lottery and relative reluctance to save for the future—even in a tax-advantaged account.
The European Union sets its sights on online giants. EU finance ministers will meet next week to discuss rule changes that would increase taxes on multinational corporations like Google and Amazon, reports Reuters. Such changes may include a revision of “permanent establishment” criteria. That would allow EU members to tax digital multinationals could be taxed where they create value, irrespective of the multinational’s residence.
