Daily Deduction

from the Tax Policy Center

“Although they’ve come… to the end of the road… They still can’t let it go…”

By :: July 31st, 2015

To the President’s desk: A short-term highway patch. Yesterday the Senate approved an $8 billion stop-gap authorization for federal transportation funding, with just a day to spare before funding is due to expire. This brings the number of short-term extensions in the past six years to 34. Congress will deal with a longer-term bill for the fall. Really.

Because there’s not enough riding on the fall calendar: The debt limit looms. In a letter to Congress, Treasury Secretary Jack Lew said he feels confident that the US can avoid default on its debt until at least late October. In addition to highway funding and the debt limit, this fall Congress also needs to deal with Export-Import Bank reauthorization, expired tax breaks, and, oh right, government shutdown brinksmanship.

Tax synergies: Can’t live with ‘em, can’t live without ‘em. Valeant Pharmaceuticals faced questioning by the Senate Permanent Subcommittee on Investigations yesterday. The company’s former chief financial officer and current board member assured the committee that tax synergies do not factor into Valeant’s identification or pricing of acquisition targets. That’s not, however, what the company conveyed to stockholders. Meanwhile, Jim Koch of the Boston Beer Company told the panel (paywall) that the US tax code encourages takeovers: Foreign companies make 90 percent of US-brewed beer. Cheers!

IRS Commissioner John Koskinen isn’t going anywhere. Or at least, he’s not worried that he’ll soon be fired, as some in the GOP have demanded. He hinted to reporters that perhaps Republican  lawmakers are disappointed that their multiple investigations failed to turn up a political smoking gun  in the IRS scrutiny of Tea Party groups. “I've testified honestly and truthfully about what I knew at the time I knew it," Koskinen said. “If it hasn't met all their expectations… that’s not our fault.”

A warning to states: Tax cuts do not boost economic growth. There is little to no evidence to support it, but supply-side economics remains in vogue among conservative-led states. TPC’s Bill Gale reviews the research, and concludes: “There is no reason to believe that tax cuts are an elixir for economic growth…[and] with or without the elusive supply-side effect, high-end tax cuts have exacerbated income inequality.”

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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 […]

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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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