You know what eats up a tax windfall? Higher gas prices. The Trump Administration has abandoned the Iran nuclear deal. Could more instability in the Middle East drive up gas prices? Some predict that the steady increase in oil prices could erase nearly half of the economic boost expected from the Tax Cuts and Jobs Act. Americans already have spent a good share of their extra income post-TCJA on gas.
Will the TCJA prompt a fresh look a homeownership policy? TPC’s Gene Steuerle explains how reduced tax benefits of homeownership under the new tax law raises important questions about the upside-down nature of those tax subsidies. The TCJA means far fewer taxpayers will itemize, thus only about one-tenth of all households—most with high incomes—will enjoy the tax benefits of homeownership. Steuerle concludes that this should “encourage policymakers to rethink housing policy, including tax benefits and direct spending programs for both renters and owners.”
There they go again. In a Politico interview in Tuesday, House Democratic Leader Nancy Pelosi said it was “accurate” that Democrats would “rollback” the 2017 tax cuts. Republicans pounced, accusing her of wanting to “raise taxes.” On Wednesday, Pelosi said she meant only that “we would rebalance it so that we put middle-class families first. It does not include higher taxes, no matter what the Republicans try to tell you.” Plus ca change…
Seattle’s head tax is a head-scratcher. TPC’s Howard Gleckman considers Seattle’s effort to tax mid-sized and large employers such as Amazon based on their number of employees. The goal: To raise revenue for homeless services and affordable housing. “Rule #1 of tax economics is ‘If you want less of something, tax it.’ Thus, whether it intends to not, Seattle would be saying it does not want so many people working at mid-sized to large firms in the city.” The tax may end up driving away businesses and hurting low- and moderate-income residents.
But Seattle’s soda tax has been lucrative, so far. City officials had estimated the tax on sugary drinks would raise $14.8 million in 2018. First-quarter tax payments already total $4,082,015. The city’s 1.75 cent-per-fluid-ounce tax on the distribution of sweet drinks went into effect on New Year’s Day.
Germany’s economic strength will boost its tax revenues for the next few years. The Associated Press reports on Germany’s forecast tax revenues of $917.7 billion, or €772.1 billion. That’s €7.8 billion more than predicted in November. Finance Minister Olaf Scholz said that additional revenues will fund limited tax relief, among other things, next year.
If you’d like to tell us about a new research paper or have any comments about the Daily Deduction, TPC’s summary of the day’s tax news, write Renu Zaretsky at [email protected]. You can sign up here to receive the Daily Deduction as an email newsletter every weekday morning (Mondays only when Congress is in recess) at 8:00 am.
