Daily Deduction The times… are they changing?
Renu Zaretsky
Display Date

“Come gather round people, wherever you roam.” Having failed to pass either Majority Leader Mitch McConnell’s replacement for the Affordable Care Act or a bill to repeal the law now and replace it in two years, the Senate now moves on to Plan C—a long series of floor amendments from which McConnell will try to assemble a final bill. Or perhaps Plan D, the so-called skinny repeal. Or will this be “the end of our elaborate plans, the end?” 

“Come writers and critics who prophesies with your pen.” Two informal advisers to President Trump are pitching an effort to pass a steep short-term tax cut if a broader overhaul isn’t possible. Larry Kudlow and Steve Moore are pushing Three Easy Pieces: (1) Cutting  the corporate tax rate  from 35 percent to 10 percent for 10 years. (2) Doubling the standard deduction and (3) Allowing multinational companies to repatriate earnings currently held overseas without significant tax penalties. Their plan is a departure from policies proposed by Treasury Secretary Steven Mnuchin and National Economic Council Director Gary Cohn.

“Come senators, congressmen please heed the call.” Politico reports that the so-called gang of six—Mnuchin, Cohn, McConnell, House Speaker Paul Ryan, House Ways & Means Chair Kevin Brady and Senate Finance chair Orrin Hatch—may disclose a broad outline of its tax reform plans by the end of the week. Politico’s Nancy Cook writes that it will be “more of a messaging document than a detailed policy blueprint…to present a unified front on tax reform.” The group has been meeting behind closed doors to craft a tax plan.

“Keep your eyes wide, the chance won't come again.” How about an expansion of the EITC? House Republicans Mike Coffman of Colorado and John Faso of New York and Democrats  David Cicilline of Rhode Island and Mark Takano of California, proposed legislation to expand the Earned Income Tax Credit. The bill would: raise the maximum credit for childless adults; adjust  the phase-in and phase-out rates so the credit grows more quickly but then shrinks more quickly as income nears the maximum; phase the credit in and out over a greater range of incomes; and reduce the minimum age to claim the credit from 25 to 21.

“And don't speak too soon, for the wheel’s still in spin.” A Cook County, Illinois judge will rule on Friday on the legality of the county’s penny-per-ounce tax on sugary drinks. Judge Daniel Kubasiak blocked the tax on July 1, pending his final ruling on the tax. Opponents say it does not apply to beverages equally. For example, a Starbucks Frappuccino purchased at a convenience store is taxable, but not if it is bought at a Starbucks store.

“Don't stand in the doorway, don’t block up the hall.” Maybe it’s time for a fracking tax in Pennsylvania. The state legislature remains at a budget impasse. Democratic Governor Tom Wolf and other legislators want to close a $2 billion budget gap with a combination of borrowing, transfers and some new revenue. Some GOP lawmakers think “it’s time to consider a severance tax” on gas drilling.

“For he that gets hurt will be he who has stalled.” Now is not the right time for one  tax cut in Michigan. GOP Governor Rick Snyder vetoed a bill that would have sped up a tax cut for those trading in one vehicle when purchasing another one. Under 2013 state “sales tax on the difference” law, buyers could exempt up to $2000 in trade-in value from the state’s 6 percent sales tax, with the exemption climbing by $500 each year over 25 years. Today, the exemption is up to $3,500. Snyder said no to an acceleration of that phase-in, which would have reduced sales tax revenue by an extra $21.2 million by 2021. His veto caused bipartisan consternation, and a GOP co-sponsor of the legislation, Sen. Dave Hildenbrand, said he’s committed to identifying necessary revenue to address Snyder’s concerns.