The TCJA and the Zombie AMT. TPC has analyzed the effects of the Tax Cuts and Jobs Act on the individual Alternative Minimum Tax. As TPC’s Howard Gleckman explains, it cuts the number of AMT taxpayers from 5.2 million in 2017 to just 200,000 this year. And unless you make more than $1 million-a-year, there is almost no chance you’ll pay it—until 2026. But once nearly all the TCJA’s individual income tax changes expire in 2025, the number of AMT taxpayers will increase to more than 7 million. Like the characters in a bad zombie movie, it isn’t so easy to dispatch the AMT.
How are US companies using their TCJA savings? The TCJA cut the corporate tax rate from 35 percent to 21 percent. In a survey of 152 companies, Korn-Ferry International found that 14 percent have applied part of their tax savings to base salary increases. Meanwhile, of 1,500 companies polled by Mercer LLC, 4 percent say they will apply tax savings to bigger paychecks next year. Aon PLC surveyed over 1,000 companies and found that just 1 percent reported the tax cuts were prompting them to increase minimum wages.
Did President Trump benefit from his father’s tax dodges? The New York Times reports that Trump “received at least $413 million in today’s dollars from his father’s real estate empire, much of it through tax dodges in the 1990s.” It says the family used a sham corporation as well as techniques to undervalue its holdings when paying taxes. A trump lawyer called the story “100 percent false, and highly defamatory.”
A Thank BEZOS Act? Yesterday, Amazon announced that beginning in November it will increase its minimum hourly wage to $15 per hour for all full-time, part-time, temporary, and seasonal employees in the United States. Senator Bernie Sanders congratulated Amazon CEO Jeff Bezos for “doing exactly the right thing.” Last month, Sanders and California Representative Ro Khanna had introduced the “Stop BEZOS Act” that would require large companies to reimburse the government for the cost of any federal benefits its workers receive. That bill would likely harm many of the workers Sanders and Khanna want to help, as TPC’s Len Burman explained.
How can the federal government’s intergovernmental grant system better help states during an economic downturn? TPC’s Tracy Gordon, in her chapter for The Hamilton Project, notes that those federal grants are worth about $700 billion annually to state and local economies. She examines how the federal government could use existing grant programs as a more effective shock absorber in recessions and a better economic equalizer in recoveries. Tracy then proposes ways to improve federal grants to offset differences in underlying state fiscal capacity and respond more quickly to regional economic downturns and national recessions.
Rhode Island’s tax incentive reports give policymakers valuable insight. Rhode Island has released 12 reports this year that evaluate the state’s tax incentive programs. The reports include detailed background information, data, and analysis of each incentive, as well as policy recommendations. Pew Charitable Trusts notes that a growing number of states are evaluating tax incentive as economic development tools, improving lawmakers ability to make policy decisions based on data rather than conjecture.
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.
