Daily Deduction

from the Tax Policy Center

Long-term Highway Funding: “Ain’t no time like three months from now”

By :: July 30th, 2015

Another summer kick of the can…down the “highway.” The Senate will vote today on its long-term highway bill. Of course, the House has already gone home for August, so the Senate will also extend federal highway funding for three months before it expires tomorrow. The White House signaled that President Obama will sign the short-term extension. This gives the House more time to work on its own long-term bill. A fall conference  between the two chambers may, or may not, reach agreement on how to pay for roads and infrastructure over the long term.

One small step for innovation, one giant step for international tax reform? Congressmen Charles Boustany and Richard Neal have a plan: Allow US companies to pay a discounted 10 percent tax on a share of profits from patents and other intellectual property. It could be an incentive for US companies to generate profits on US soil. As Bloomberg reports, it could also be a major step toward a revamp of international taxation, as well as the start of some serious lobbying by pharmaceutical and tech companies.

Also on the Hill today, a hearing by a panel with a renewed mission. The Senate Subcommittee on Permanent Investigations holds a hearing today on the “Impact of the U.S. Tax Code on the Market for Corporate Control and Jobs.” The panel’s GOP chairman, Rob Portman, wants to focus on federal agencies and departments. Under previous leadership, the panel investigated tax compliance of large firms such as  Apple and Goldman Sachs.

Philadelphia’s cigarette tax brings in revenue for schools, but for how long? Last fall, the city boosted its cigarette tax to $2 per pack and earmarked it for  schools. The levy raised $50.2 million in nine months and could raise another $60 million through June 2016. But as the price of a pack climbs, many smokers may buy their cigarettes in the lower-tax suburbs and reduce city school revenue below projections. Fewer residents are smoking, too: The number of calls to smoking cessation lines has climbed since the tax hike.

Chicago Mayor Rahm Emanuel says “wait and see” about property tax rates, but nobody’s blind to the city’s borrowing. Chicagoans may face a hike in their property taxes, but Mayor Emanuel says they’ll have wait until September to see whether it’s part of his budget proposal. Earlier this month, the city borrowed $1.1 billion. That includes taxable debt of $743 million—the largest taxable bond issue the city ever sold.

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States That Cut Taxes Do So At Their Peril

By :: July 29th, 2015

Ever since the 1970s, when Jude Wanniski and Arthur Laffer came up with the ideas that are now referred to as supply-side economics, conservative politicians have been unable to resist the siren song of tax cuts for big earners. In recent years, this enthusiasm has spread to state governments led by conservatives, offering new tests […]

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Another Short-Term Rescue and a Misdiagnosed Problem

By :: July 29th, 2015

The latest on highway funding… Just before leaving town for its August recess, the House approved a three-month extension of highway funding until October 29. That is likely to push  the Senate to follow suit. The Senate is likely to act tomorrow. Lawmakers say they’ll use the extra time to work with the White House […]

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Hillary Clinton’s Off-the-Mark Proposal to Encourage More Patient Investors

By :: July 28th, 2015

Democratic presidential hopeful Hillary Clinton has proposed to radically rejigger top capital gains tax rates to encourage investors to take a longer-term perspective. But I think she’s misdiagnosed the problem and, even if she’s right, the proposal won’t work as she expects. Her idea: Give investors a tax incentive to support productive long run investments […]

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Running Out the Clock on the Hill?

By :: July 28th, 2015

Highway funding work continues. The Senate continues its work on highway funding legislation, scrambling to finish its work by the end of the week. If it doesn’t send a bill over by tomorrow, the House will not have to time to consider it before current funding expires on Friday. Neither the House nor the Senate […]

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How Did the Gas Tax Lose Its Mojo, Even Among Conservatives?

By :: July 27th, 2015

With just a few days left before federal funding for highway programs expires, the Senate is debating all sorts of amendments to an extension– from export subsidies to the Affordable Care Act. But there is one subject it will not debate—the gas tax. Except for a handful of lawmakers, nobody in Congress or the White House […]

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Compliance, Complications, and Competition

By :: July 27th, 2015

The latest from the Hill… The Senate continued its work on highway funding yesterday: It blocked Senator Ted Cruz’s effort to tie the bill to the Iran deal; approved reauthorization of the Export-Import Bank; and defeated a symbolic Affordable Care Act repeal amendment. The House and Senate both hope to pay for the road bill with […]

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"The Long and Winding Road... Will Never Disappear..."

By :: July 24th, 2015

The Senate’s six-year highway bill inches forward, after dropping a Social Security provision. Majority Leader Mitch McConnell won 14 Democrats’ votes for the bill after he agreed to drop a $2.3 billion offset. The money would have come from barring people with felony warrants from getting Social Security benefits. The Senate will keep voting on […]

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Who Benefits Most From Repealing the ACA Cadillac Tax?

By :: July 23rd, 2015

Republicans and some Democrats in Congress are pressing to repeal the Affordable Care Act’s Cadillac tax—a 40 percent excise tax on high-cost employer-sponsored health insurance plans. Backers of repeal argue that curbs on these generous plans would disproportionately hurt low- and middle-income workers. But a new Tax Policy Center analysis shows that story is overstated. In […]

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Big Talk, Growing Opposition

By :: July 23rd, 2015

Can the Senate pass a highway bill? Last night, the Senate finally voted to begin debate on its version of a transportation bill. But it is in for a tough slog thanks in part to two GOP presidential hopefuls. Ted Cruz has threatened to tie the Iran deal to the measure. The Texan wants an amendment that “ensures no Iranian nuclear deal unless Iran recognizes […]

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