Probably the tax plan, now says the White House. National Economic Council Director Gary Cohn told the Fox Business Network that the Trump Administration “will have a very detailed, drafted tax plan to be delivered to Congress” by the time it returns from the August recess. He said the administration expects Congress to pass a tax reform bill before the year is out. Wisconsin GOP Senator Ron Johnson also says a tax cut is more likely to come before the repeal and replacement of the Affordable Care Act.
About the president’s budget…never mind. Budget director Mick Mulvaney told the Washington Examiner that the summary of the president’s tax ideas included in his May budget may not be his real plan: ''I wouldn't take what's in the budget as indicative of what our proposals are.'' No word about what Trump’s plan is, if not what is described in the budget.
Which leaves TPC (and everyone else) making assumptions about what it will look like. TPC’s Howard Gleckman lays out the TPC’s assumptions as it prepares to analyze a tax framework that generally tracks the President’s ideas. “TPC can’t model the president’s tax plan precisely since no one, perhaps not even his staff, has filled in the key details. But TPC can sketch out the effects of a proposal that conforms to the president’s stated aims.”
Whatever happens with tax reform, it will affect more than revenues. TPC’s Gene Steuerle offers a reminder that “Policymakers engaging in tax reform must recognize how their decisions can disrupt markets for a wide range of economic activity, including health care, housing, and charitable giving. Some of those behavioral reactions may be secondary and unintended, but they can’t be ignored.”
The debt limit looms, but don’t worry, says the White House. In an interview with The New York Times, Mulvaney assures that “There is absolutely no way that the U.S. will ever default on its debt. We are not going to do that.” On a related note: Mulvaney also stated in the Examiner interview that "Deficits are not driving the discussion, at least in this White House, about the tax plan. Growth is driving the discussion.”
Speaking of Growth. On Wednesday, the House Budget Committee considers “The Economic and Fiscal Benefits of Pro-Growth Policies” in a hearing with Douglas Holtz-Eakin of the American Action Forum and Jason Furman of the Peterson Institute for International Economics.
And speaking of deficits… TPC’s Howard Gleckman explains why it will be hard for President Trump and the House GOP and to pass a tax bill that cuts rates without adding to the deficit: “Take a look at the politics of the individual income tax’s state and local tax deduction (aka SALT). A quick peek at the makeup of the House tells the story: There are more than enough Republicans from high-tax states to block efforts to kill the deduction.”
Time, and probably candy, are on the President’s side. President Trump has filed for an extension on his 2016 tax returns. He’s a wealthy man and certainly has complicated returns. The Wall Street Journal, using TPC data, explains how the tax code affects the rich and everyone else, with help from a few very large bags of candy.
Louisiana’s tax reform efforts: Shelved. Republican state Reps. Barry Ivey and Julie Stokes held their flat tax proposals in committee rather than putting them to a vote they’d surely lose. Their bills aimed for revenue neutrality to secure House votes, but Senators want to reduce an expected $1 billion budget shortfall.
Montana gets ready to collect a medical marijuana tax. The tax will be 4 percent on gross sales of medical marijuana through June 30, 2018, then will fall to 2 percent. The 4-percent tax could bring in about $750,000, based on the 11, 877 registered medical marijuana users in 2016. However, since the current number is 15,563, revenues could approach $1 million.
Massachusetts uses the internet to collect tax on internet sales. The state is adopting a definition of physical presence that relies on downloaded apps and “cookies,” or data which websites use to track a consumer’s computer or phone’s visit. The state argues that such presence on a consumer’s device gives it the ability to require sellers to collect its 6.25 percent sales tax beginning July 1. The theory will almost surely be tested in court.
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