On the Hill or Out the Pocket: Tax Reform and Some Bottom Lines
Sales taxes: Maybe there’s a better way? The House Judiciary Committee will explore alternatives to solve the internet sales tax issue this morning. Whether Chairman Bob Goodlatte responds to pressure from small business owners to move legislation this year remains unclear, but something’s gotta give. TPC’s Howard Gleckman noted in early December that either individual states or Congress will need to resolve the issue, given the Supreme Court’s decision last Cyber Monday.
More on the President’s Budget: Treasury Secretary Jack Lew testifies before the Senate Budget Committee on the President’s 2015 budget’s revenue proposals this morning, while HHS Secretary Kathleen Sebelius testifies on the topic before the House Ways and Means Committee. Sebelius will likely need to defend the Affordable Care Act’s anticipated financial impacts. For what it’s worth, the tax preference for employer- sponsored insurance costs more than the ACA’s Medicaid expansion and subsidies for moderate- and low-income families.
Speaking of low-income families: How would they do under Camp’s tax reform plan? TPC’s Elaine Maag tracks the many moving parts and finds that Camp would benefit some married couples with young children at the expense of some childless workers and single parents, as well as families with older kids: “[L]ow-income families with students aged 19-24 or 18-year-old children would lose the sometimes-substantial support they receive” under the EITC, while childless families would face a cut in their EITC maximum.
And what if the EITC were extended? The Urban Institute’s Gene Steuerle and George Mason University’s Jason Fichtner examined President Obama’s plan to extend the EITC to single, childless, adult workers in a recent C-SPAN interview. They both noted that the EITC does indeed encourage those who receive it to work and can keep them above the poverty line, but Steuerle notes that President’s proposed change is relatively modest.
Municipal bonds and brokers: With fees like these, who needs taxes? The Wall Street Journal reports that “Investors who put cash into municipal bonds—a widely popular strategy for those seeking safe, tax-free bets—are paying about twice as much in trading commissions as they would for corporate bonds…” Ouch.
On the issuing side of the bond ledger, a policy brief by Tracy Gordon (she was at the Brookings Institution when she wrote it) assessed developments in the municipal bond market and their implications for local government borrowers. It’s a rather prescient piece, especially with stories like these out of Detroit. Gordon is now on staff at the White House Council of Economic Advisers.
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