Taxes, Debt, Spending

Commentary & Community

Seattle Passes a Head Tax on Employees

 

The tech boom has been good to Seattle. Companies like Amazon have revitalized a city that was once in such a severe decline that it featured a billboard requesting, “Will the last person leaving Seattle turn out the lights?” Now the city council has unanimously voted to mandate that large companies in the city to pay a new tax on every employee – an idea that many fear would hurt job growth there.

 

Under this tax plan, companies that have $20 million in annual gross receipts would be subject to a tax of $275 a year for every employee working at these companies. This tax would end in five years, with the council having the option of renewing it. The revenue from this tax is slated to be used for constructing affordable housing units and emergency services for the homeless.

 

Initially, the tax was $500 a year for every employee and it would have been replaced by a .7% payroll tax in 2021. Seattle Mayor Jenny Durkan pushed for a lower tax that did not transition to a payroll tax.

 

Advocates of this tax say it is needed because the companies being targeted have contributed to the high cost of housing in the city. These advocates contend that it is only fair to ask these companies to pay a special tax to help the city government provide affordable housing and homeless services.

 

Opponents of the tax include business owners and some unions. They say that it will penalize companies for creating jobs in Seattle. This will discourage companies from hiring new workers or locating their business in Seattle. These observers note that companies can set up their headquarters in suburbs and still enjoy many of the benefits of being located in the Seattle metropolitan area.

 

Amazon paused consideration an office building’s construction during the consideration of the tax and said that it would look at leasing some of its space to other companies. Tax supporters accused Amazon of trying to blackmail the city, while tax opponents said this was the natural reaction of a business being targeted by a punitive tax proposal.

 

Do you think that large companies should pay a special tax for every person they employ to fund government affordable housing programs and homeless services?

 

State Employee Pay Raise Hits West Virginia Budget

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Teachers in West Virginia Struck for nine days – the longest teaches’ strike in state history – and won a 5% pay increase. Then it was up to legislators to find money in the budget to fund the pay hike for not only teachers but all state employees. They did so, but other areas of the budget felt the hit.

 

Gov. Justice signed legislation that provided teachers with their 5% pay increase on March 6. Then a few days later legislators passed a state budget that included a 5% pay increase for all state employees. The salary increases cost $111 million. Other items demanded by teachers, such as concessions on health insurance increases, cost an additional $43 million.

 

To help offset the pay raises for state employees, legislators took the following budget actions:

  • A $46 million increase as requested by Gov. Justice for the Division of Commerce and the Department of Tourism will not be funded
  • $18 million in deferred maintenance projects will not be completed
  • $12 million transfer to the roads fund from the general fund will not happen
  • $13.5 million to shore up the state’s workers’ compensation fund will not be provided

 

The budget also calls for cuts to the Medicaid program, but it is likely that the governor will find a way to make that money up from elsewhere.

 

With the governor signing the budget, it puts the pay raise issue to rest for the time being. However, there is concern over whether revenue projects are correct. If revenue is less than anticipated, it will cause problems in the coming fiscal year.

 

Do you support West Virginia state employees receiving a 5% pay raise? Or do you think that legislators had to cut too much from the state’s other budget priorities to fund this pay hike?

 

 

Tax Hike Coming to New Jersey

 

New Jersey Governor Phil Murphy has ambitious spending plans for his first year in office. Legislators have their own budget plans. Once they settle their differences, however, it appears that taxes will be going up in the Garden State.

 

The newly-elected Democratic governor’s budget proposes spending $37.4 billion in the next fiscal year, an increase of 8% over the current fiscal year’s level. A major area where this new spending would be allocated is for the state’s pension system. Currently underfunded, Gov. Murphy wants to put $3.2 billion towards shoring it up. There would also be an additional $284 million for K-12 education spending, $57 million for preschool, $50 million for subsidies for community college students, and $167 for the state’s transit agency.

 

Paying for this new spending would come from a variety of tax hikes:

  • An income tax of 10.75% on those making $1 million or more, retroactive to January 1
  • A sales tax increase from 6.625% to 7%
  • New taxes on users of Uber, Lyft, Airbnb and similar services

 

Gov. Murphy will also push to legalize, and then tax, recreational marijuana.

 

Even though Democrats control the legislature, it is unclear if how this tax plan will fare. Senate President Steve Sweeney favors increasing income taxes on corporations making over $1 million a year. He has been cool to the idea of a “millionaire’s tax,” such as the one proposed by the governor.

 

Under New Jersey’s constitution, legislators can either use the governor’s budget plan or develop one of their own. Given the disagreement on taxes, this may be the option that legislators exercise this year.

 

Regardless of these differences, both the governor and legislators support higher spending. With the disagreement centered on what taxes to increase, not on whether to increase taxes at all, it appears certain that New Jersey taxpayers will be paying more soon.

 

Do you support higher taxes in New Jersey? Is it a good idea to legalize and tax recreational marijuana as suggested by Gov. Murphy?

Presidential Tax Returns, Term Limits, Gerrymandering at Play in Maryland Legislature

 

During the Maryland’s 2018 legislative session, lawmakers are considering many bills that touch on how state elections should be conducted – which is appropriate given that Gov. Hogan and every seat in the General Assembly is up for election this year. The Republican governor and the Democratic-controlled legislature often have sharply differing views on legislation, and election bills are no exception.

 

Here are some of the high-profile election measures being discussed in the General Assembly this year:

 

Presidential Tax Returns

 

During the 2016 presidential campaign, Donald Trump broke with decades of tradition in not releasing his income tax returns to the public. Under legislation approved by the Maryland Senate, any candidate who wants to be on the state ballot would be required to do so in the future. This bill would mandate that any presidential candidate would have to give the Maryland State Board of Elections a copy of his or her tax returns for the past five years prior to being certified for the ballot. The board would then release those returns to the public. Senators voted down an amendment to apply such a standard to state candidates. If this bill becomes law, there is likely to be a legal fight over concerns that it places requirements on presidential candidates that go beyond what the U.S. Constitution allows.

 

Redistricting

 

In 2015, Gov. Hogan put together a bipartisan commission to consider reforms to the state’s process for drawing district lines for Congress and the General Assembly. This commission produced a report that recommended a variety of ways to limit gerrymandering. These included empowering an independent commission to draw districts that are compact, composed of contiguous territory, and that respect county and city lines. Legislators failed to act on these recommendations when they were made in 2016. The governor continues to press for a constitutional amendment that would implement these changes.

 

Term Limits

 

During his State of the State Address, Gov. Hogan proposed limiting legislators to serving two four-year terms. He called on members of the Senate and House of Delegates to place the issue on the November ballot for voters to decide. Fifteen other states have term limits for legislators and the Maryland governor is limited to serving two terms. It seems unlikely that there is enough support from legislators to put this issue before voters, however.

 

Foreign Election Observers

 

As with the tax return bill, the 2016 election also influenced debate over legislation that would make it easier for foreigners to observe the conduct of Maryland elections. This bill would ease the process for international election observers to operate in Maryland. The bill easily passed committee, but when it reached the Senate floor there were concerns about foreign meddling. Senate President Mike Miller specifically brought up accusations of Russian interference in the 2016 election as a reason to oppose the bill. Eventually the Senate voted to recommit the bill to committee, effectively killing it.

 

 

Do you support term limits for legislators? What do you think about requiring presidential candidates to release their tax returns?

Trump Budget Increases Spending for Some, Slashes it for Others

 

A week after signing a proposal to allow an increase in spending by roughly a half-billion dollars over the next two years, President Trump has released his budget proposal for the next decade.

 

Overall Impacts 

Committee for a Responsible Federal Budget - 

The policies called for in the President's budget would reduce deficits by $3.6 trillion relative to its own baseline (and about $3.1 trillion relative to current law), the result of $1.2 trillion of new spending and tax cuts ($1.75 trillion relative to current law), $3.7 trillion of deficit reduction (mostly on the spending side), about $800 billion in reduced war and disaster spending, and a bit over $300 billion in interest savings.

 

Proposed Increases in Spending

  • Defense -- $800 billion increase for next year
  • Infrastructure -- $21 billion, part of a $200 billion, 10-year plan
  • Department of Commerce -- $600 million increase
  • Department of Homeland Security -- $5.1 billion increase
  • Veterans’ Affairs Department -- $6.8 billion increase

The budget also allocates $18 million for a wall on the U.S./Mexico border.

 

Proposed Decreases in Spending 

According to the White House, this budget includes “proposed savings of $48.4 billion in discretionary programs, including $25.8 billion in program eliminations and $22.6 billion in reductions” for the next budget year. Here are some of the areas where the president has proposed decreased spending:

  • Department of Agriculture -- $938 million, including ending funding for land acquisition and rural wastewater grants
  • Department of Education -- $5.7 billion, including the elimination of a variety of federal grant programs
  • Department of Health and Human Services -- $4.3 billion, including the elimination of low-income heating grants
  • State Deparment and USAID -- $4.7 billion, including eliminating funding for the Global Climate Change Initiative
  • National Endowment for the Arts -- $121 million cut
  • Corporation for Public Broadcasting -- $480 million cut

The president’s proposal also calls on a redesign of the Supplemental Assistance for Nutrition Program (SNAP). These include greater restrictions on who is eligible for food benefits, more work requirements, and using a portion of the program’s funding to provide food commodities to recipients.

 

Next Steps

This budget outline is simply the president’s desired spending path over the next decade. It has no force of law and does not actually affect federal spending. Congress will likely enact its own budget resolution, which is unlikely to bear much resemblance to the president’s proposal. The congressional budget resolution will outline the spending bills that will provide funding for actual federal spending in the next fiscal year.

 

Do you support President Trump’s budget as a good way to trim wasteful federal spending? Or is the president’s budget a blow to necessary government programs?

 

Democrats, Republicans Agree to Big Spending Increase

 

Bipartisanship flourished in Washington this week. While the parties have major differences, it seems the one thing that Democrats and Republicans can both agree on is a spending increase of $500 billion over two years.

 

Members of the two parties came together to pass a continuing resolution that would keep the government open until March 23, but eliminates caps on military and domestic spending that have been in place for most of this decade.

 

Here are some key features of the agreement that will add $320 billion to the deficit:

  • Sixty percent of the spending increase goes to the military, the rest is for domestic programs.
  • It includes $90 billion in disaster relief for Puerto Rico.
  • There are targeted tax breaks for a variety of activities, including rum production, wind energy development, geothermal projects, and film production.
  • It raises the debt ceiling until 2019.

 

Republicans pushed for the military spending increases. For Democrats, the package prevents scheduled cuts for Medicare and Medicaid, has nearly $6 billion for Child Care Development Block Grant, and $20 billion in money for infrastructure (which includes rural broadband funding), among other things.

 

Not everyone was thrilled with the bill, however. Sen. Rand Paul (R-KY) used procedural motions to block quick approval of it. He was opposed to the size of the spending increases and the fact that it will add significantly to the deficit. On the Senate floor, he said:

 

I ran for office because I was very critical of [Barack] Obama’s trillion-dollar deficits. Now we have Republicans hand-in-hand with Democrats offering us trillion-dollar deficits… I can’t in all good honesty, in all good faith, just look the other way because my party is now complicit in the deficits.

 

Sen. Paul’s delaying tactics prevented the bill from being passed and signed by the president by midnight on February 8, which is when funding for government operations ran out. This led to a brief five-hour shutdown of the federal government. Eventually, however, both the Senate (on a vote of 71-28) and the House of Representatives (on a vote of 240-186) passed the resolution, which President Trump signed.

 

Do you support increasing federal spending by $500 billion over the next two years? Or do you think it is a bad idea to grow the deficit?

 

The Government is Open – For Now

 

After a shutdown that lasted for a weekend and one workday, the federal government is re-open and running. However, two large questions remain after this brief shutdown: Will Congress hold a vote that provides “Dreamers” protection from deportation? And, will the government shut down again after the short-term funding bill expires in February?

 

Dreamers

 

A solid block of Democratic senators voted against a government funding bill on January 19. Needing to reach a 60-vote threshold to overcome a filibuster, Majority Leader Mitch McConnell did not have sufficient votes to advance this bill through the Senate. What followed was a brief shutdown.

 

The Democrats were upset that this funding measure did not resolve the situation of individuals covered under President Obama’s Deferred Action for Childhood Arrivals (DACA). These individuals, known as “Dreamers,” were brought to the country illegally by their parents. President Obama issued an order giving some of them protection from deportation. President Trump revoked that directive, and asked Congress to act on legislation that would codify legal protection.

 

When President Trump, Congressional Republicans, and Congressional Democrats could not agree on the details of a DACA bill, Democrats in the House and Senate voted against short-term funding legislation. After days of negotiations, Senate Minority Leader Chuck Schumer reversed course upon assurances by Sen. McConnell that a bill containing DACA protections would be brought to the floor of the Senate for consideration. Sen. McConnell also said this bill would include other immigration measures.

 

A Long-Term Funding Fix

 

The measure approved by the Senate only provides funding for the government through February 8.

 

With Congress failing to pass individual appropriations bills to fund the various federal agencies, the operations of the federal government are dependent on either continuing resolutions (which fund the government at the previous year’s levels) or omnibus appropriations bills (which combine smaller spending bills into one larger bill).

 

For the federal government to continue operating past February 8, the House and Senate must pass either another continuing resolution or an omnibus appropriations bill. Efforts to do this are complicated by spending limits that are in place due to the 2013 sequester legislation. That agreement put caps on defense and discretionary spending. These caps can be lifted, and have been in the past. But there is no agreement among members of the two parties on how to lift the caps for this fiscal year (which began on October 1, 2017).

 

It seems unlikely that such an agreement can be reached by early February. That means that there will be another short-term continuing resolution to give congressional negotiators more time to accomplish this.

 

What do you think about the government shutdown? What path should Congress take on immigration and spending?

 

Congress Key Votes – Taxes, Spending, Class-Action Lawsuits, “She Persisted”

 

Check out these key votes made by elected officials in Congress earlier this year, and go to www.votespotter.com to sign up and see how your elected officials voted on these and other issues that impact your daily life.

 

U.S. House Bill 1, Reduce tax rates and eliminate some deductions: Passed 51 to 49 in the U.S. Senate on December 2

To set new federal income tax rates (10%, 12%, 22%, 24%, 32%, 35%, and 38.5%) to replace the current tax rates (10%, 15%, 25%, 28%, 33%, 35%, and 39.6%), increase the standard deduction ($12,000 for single filers, $18,000 for heads of household, and $24,000 for joint filers), eliminate the mandate that individuals must purchase health insurance, increase the child tax credit from $1,000 to $2,000, cut the corporate income tax rate from 39% to 20% starting in 2019, authorize a 23 percent deduction for income from smaller businesses whose earnings are taxed at the owner's individual tax rate, double the estate tax exemption, and more. The individual income tax provisions sunset in 2025.

 

U.S. House Bill 1, House version of federal income tax cuts and reform: Passed 227 to 205 in the U.S. House on November 16

To create four new federal income tax rates (12%, 25%, 35%, and 39.6%) that would replace the seven current rates (10%, 15%, 25%, 28%, 33%, 35%, and 39.6%), increase the standard deduction (to $12,200 for single filers, $18,300 for heads of household, and $24,400 for joint filers), eliminate a deduction for state and local tax payments (except homeowners could still deduct up to $10,000 in property taxes), limit the mortgage interest deduction to loans under $500,000, increase a child tax credit from $1,000 to $1,600, cut the corporate income tax rate from 39% to 20% starting in 2020, cut and phase-out the federal estate tax, and more.

 

U.S. House Bill 601, Fund disaster-related programs, raise the debt ceiling: Passed 316 to 90 in the U.S. House on September 8 and 80 to 17 in the Senate on September 7

To provide $7.4 billion in direct funding for Hurricane Harvey disaster relief, $450 million to the Small Business Administration’s disaster loans program, and $7.4 billion in general disaster spending. As “emergency” spending, this funding is exempt from budget controls aimed at controlling the deficit. The bill also raises the federal debt limit and funds federal government operations for another three months.

 

U.S. House Bill 985, Restrict class action lawsuits: Passed 220 to 201 in the U.S. House on March 9

To prohibit lawyers from bringing class action lawsuits unless the individuals in the lawsuit have suffered the same type and scope of injury. The bill also mandates that lawyers who successfully bring class action lawsuits get paid only after the victims collect any damage awards.

 

U.S. Senate Motion 57, Affirm Senator Warren broke Senate rules: Passed 49 to 43 in the U.S. Senate on February 7

To uphold the ruling of the chair that Senator Elizabeth Warren broke Senate Rule 19, which prohibits any senator from “imput[ing] to another Senator or to other Senators any conduct or motive unworthy or unbecoming a Senator." Senator Warren had been reading a letter by Coretta Scott King about Senator Jeff Sessions, whom President Trump had nominated to be Attorney General. The chair had ruled that by reading certain sections of this bill, Sen. Warren had disparaged her colleague, Sen. Sessions.

 

Key Pennsylvania Votes on Budget, Regulations, and Taxes


Check out these key votes made by elected officials in Pennsylvania earlier this year, and go to 
www.votespotter.com to sign up and see how your elected officials voted on these and other issues that impact your daily life.

 

House Bill 542, Collect tax on Internet sales: Passed 102 to 88 in the House on October 17 and 29 to 21 in the Senate on October 25

To mandate that remote sellers with sales over $10,000 collect Pennsylvania’s sales tax. The bill also removes the $5 million cap on the net operating loss deduction for Pennsylvania businesses and allow the sales of fireworks to Pennsylvanians with a special 12% tax, among other things.

 

Senate Bill 181, Establish performance-based budget review: Passed 180 to 4 in the House and 50 to 0 in the Senate on October 25

To direct the Secretary of Budget to review agency budgets based on performance instead of on subtracting or adding to traditional spending levels. Under a performance-based review, an agency would have to show how its proposed spending is being allocated to meet certain performance goals and benchmarks. The bill would allow the Secretary to undertake a review at least once every five years, and the General Assembly could also request such a review. The bill also directs the state to undertake a review of the effectiveness of various state tax credits.

 

Senate Bill 561, Mandate legislative review of expensive regulations: Passed 29 to 20 in the Senate on June 13

To mandate that the General Assembly approve regulations that impose more than $1,000,000 in annual costs to the commonwealth, local governments, or the private sector.

 

House Bill 1071, Ban bag taxes: Passed 102 to 87 in the House on April 25

To prohibit local governments from imposing a tax, surcharge, or ban on plastic bags.

 

House Bill 291, Exempt children younger than 21 from inheritance tax: Passed 176 to 21 in the House on April 4

To exempt a transfer of property to a child 21 years or younger from the state’s inheritance tax.

 

Senate Advances Tax Legislation

 

At 2 a.m. on Saturday morning, the Senate voted 51-49 in favor of legislation that would reshape the nation’s tax code. The Republicans who supported this bill say that it will provide much-needed tax relief for families and boost the economy. Democrats contend that it is a giveaway to the rich that will dramatically increase the deficit.

 

Here are some of the major provisions in this tax bill:

  • Retains the current seven tax brackets, but reduces the top marginal rate to 38.5% and cuts rates in other brackets
  • The standard deduction increases to $12,000 from $6,500 for single filers, $18,000 from $9,500 for heads of households, and $24,000 from $12,500 for joint filers
  • Increases the child tax credit to $2,000 from $1,000
  • The phase-out for the child tax credit starts at $500,000 (compared to $110,000 today)
  • Lowers the corporate income tax rate to 20% from 35% starting in 2019
  • Creates a higher exemption for the corporate minimum tax
  • Exempts $11.2 million from the estate tax, up from $5.6 million now
  • Repeals the individual health insurance mandate under the Affordable Care Act, or Obamacare

 

The individual income tax changes are set to expire in 2025. This was done to give the bill a more favorable budget score, which helps ease passage. Some observers expect that these provisions of the bill would be made permanent in the future, since members of Congress will be hesitant to allow (in effect) a tax increase to tax place upon their expiration. However, there is no guarantee that this will occur.

 

All Senate Democrats opposed it. Every Senate Republican except Bob Corker of Tennessee supported it.

 

The Senate bill differs in some key respects from the House tax cut legislation. These differences must be resolved in a conference committee, then the same bill must be passed by both house of Congress and signed by the president. Given the commitment by Republicans in both branches, this process should proceed fairly quickly. It is also possible that the House of Representatives could pass the Senate version of the bill. Whatever happens, it is likely that President Trump will have tax legislation on his desk to sign before the end of the year.

 

Do you support the tax cuts in the Senate bill? Or do you think that this legislation is the wrong way to reform the tax code?

 

Governor Wants Changes to Colorado Pensions

 

Colorado has a $43 billion pension system, paying or promising retirement benefits to scores of state employees. However, this pension system faces trouble with its $32.2 billion in unfunded liabilities. In other words, the state’s politicians have promised retirees a more generous retirement package than what these politicians have actually saved money to give them. Unless the state acts, either taxpayers will be forced to cover this large gap or retirees will see their benefits drastically reduced.

 

Governor Hickenlooper’s recently released budget suggests a few options to deal with this issue. His budget has proposed reducing employees’ guaranteed cost-of-living adjustment from 2% to 1.25%. He would also like to require employees to pay an additional 2% into the pension plan, which would bring their total contribution up to 10%. In return, state employees would receive a 3% pay increase in the next fiscal year.

 

This plan takes elements from a plan put forward by the Public Employees’ Retirement Association, the board that manages the state pension system. The board’s recommendations included increasing the retirement age for newly-hired state employees, cap cost-of-living adjustments at 1.5%, and increase the amount that state agencies pay into the system on behalf of employee retirement.

 

State Treasurer Walker Stapleton, a Republican gubernatorial candidate, supports a reform that require the state to assume a lower rate of return for pension investments. Republican Sen. Kevin Lundberg has suggested the state consider moving to a retirement plan that is similar to a 401(k), which relies not on a defined benefit (like a pension) but instead on a defined contribution from the state.

 

Legislators will take up the issue of pension reform when they convene in January.

 

Do you think that Governor Hickenlooper is right to require state employees to pay more into their retirement system? Or should Colorado end traditional pensions and move state employees to something like a 401(k)?

 

Tax Cuts May Be Coming

 

On Thursday, the chairman of the House Ways and Means Committee unveiled a blueprint for tax reform. While details will change as the bill makes its way through Congress, Rep. Kevin Brady’s outline appears to have broad support among Republicans. The “Tax Cut and Jobs Act” is likely to be very close to what actually emerges if Congress passes a tax bill this year.

 

Here are a few of this bill’s changes to the current code: (more complete details are available from the Tax Foundation here):

  • Reduce tax brackets from seven to four
  • Increase the standard deduction from $6,350 to $12,000 for single filers, $9,350 to $18,000 for heads of households, and $12,700 to $24,000 for joint filers
  • Repeal itemized deductions except for mortgage interest, charitable, and property tax deductions (property tax deduction would be capped at $10,000)
  • Cap the mortgage interest deduction for new home purchases at $500,000 of principle
  • End the alternative minimum tax
  • Replace the exemption for dependents with a higher child tax credit, and increase the amount of income taxpayers could earn before this credit is phased out
  • Lower the corporate income tax rate from 35% to 20%
  • Repeal the estate tax after 6 years, and in the meantime increase the amount of the estate exempt from tax to $10 million (indexed for inflation)

 

Due to the passage of a budget resolution in October that allows for tax reform to be considered under an expedited process not subject to Senate filibuster, this tax legislation will only need a majority of votes in the House and Senate. If Congressional Republicans can remain united and devote time to moving it through the legislative process, it is possible that they could present this bill to President Trump by the end of the year.

 

Do you think that the House GOP is on the right track with its proposed changes to the tax code? Or would you prefer to see other tax reforms being discussed?

 

Michigan Takes Stand against Soda Tax

 

If Michigan senators get their way, local governments in that state will soon be banned from enacting a “soda tax” targeting sugar-sweetened drinks (or any other food).

 

Here’s how VoteSpotter described legislation passed on October 4:

 

Senate Bill 583 Ban local taxation of food and food services: Passed 31 to 5 in the Senate

To prohibit local governments and authorities from imposing a tax or fee on the manufacture, distribution, wholesaling or retail sale of food for immediate consumption or non-immediate consumption.

 

A handful of cities across the nation have passed taxes targeting sugar-sweetened drinks. Philadelphia, for instance, imposed a 1.5 cent tax on many beverages, including those sweetened artificially. Other cities with a similar tax include Oakland and San Francisco in California, Boulder in Colorado, and Seattle. Chicago also has a soda tax, but city council members are considering repealing it.

 

These taxes are aimed at promoting healthier consumption, although some experts dispute that they accomplish this goal. As discussed in a previous VoteSpotter blog, Philadelphia’s experience appears to show that they do affect consumer behavior but may harm businesses and workers.

 

States have ultimate authority over laws passed by city governments, which means soda taxes can be invalidated by state legislative action. Michigan senators are attempting to do this pre-emptively, since no local government in that state has such a tax. If SB 583 passes the House and is signed into law by Governor Rick Snyder, no city would have the power to impose such a tax in the future.

 

Do you support state action to stop local governments from imposing soda taxes? Or do you think taxing sugar-sweetened drinks is a good policy for cities to enact?

 

Congress Set to Tackle Tax Cuts

 

One of President Trump’s major legislative priorities is set for introduction in Congress: tax reform. While details are not yet finalized, there appears to be agreement between the White House and congressional Republicans on general changes to the tax code. What remains to be seen is if any legislative package this complex can emerge from Capitol Hill to be sent for the president’s signature.

 

Once details are finalized, we could see a tax reform bill introduced this week. Here is what may be in such a bill:

  • Cut the corporate tax rate from 35% to 20%
  • Cut the top individual income tax rate from 39.5% to 35%
  • Reduce the number of tax brackets from 7 to 3

 

While the president and congressional Republicans appear to agree on these aspects of the bill, they could change. President Trump, for instance, has repeatedly said that he would like to see the corporate income tax rate lowered to 15%.

 

There is also the issue of what, if any, changes to the tax code will be made to offset the effect of cuts on the federal deficit. There has been talk about reducing the number of tax breaks, but each deduction or credit in the tax code has a constituency that will fight very hard to keep that provision. If no offsets are made, tax cuts threaten to increase the budget deficit.

 

Whatever the final version, tax reform legislation will be complex and will face a difficult fight on Capitol Hill. Democrats have shown little willingness to embrace these kinds of changes to the tax code. If they are unified in their opposition, it could be difficult for Senate Majority Leader Mitch McConnell to pass anything out of the Senate.

 

Do you support cutting the corporate income tax rate and the individual income tax rate? Or would you rather see other reforms made in the tax code?

 

Trump Works with Democrats to Raise Debt Limit

 

President Donald Trump has found new allies in Congress – Senator Chuck Schumer and Rep. Nancy Pelosi. The president bypassed Republican leadership to work with Democrats on an agreement that raises the debt ceiling for three months.

 

What is unclear is if this event heralds a new era of bipartisanship between the president and congressional Democrats, or whether it is merely a one-time deal. Regardless, this move stunned Republicans in Congress, undercutting conservative efforts to tie raising the debt ceiling to limiting spending.

 

With the Trump-backed deal in place, Congress quickly passed legislation that provided over $15 billion in disaster-related spending along with the debt ceiling increase. This will allow the federal government to continue borrowing money for the next three months. Mere hours before the president and congressional Democrats agreed to do so, House Speaker Paul Ryan had panned efforts to tie the two issues together in one bill.

 

In both the House and Senate, opposition votes to this legislation came from conservatives. The Senate rejected efforts by Sen. Ben Sasse (R-NE) to remove the debt limit provisions from the bill. Senators also turned back efforts by Sen. Rand Paul (R-KY) to pay for disaster-related spending by cutting foreign aid.

 

Do you support President Trump working with congressional Democrats to pass a debt ceiling increase without tying the measure to spending limits? Do you think it’s a good idea for Congress to pass a bill that contains both disaster aid and an increase in the debt limit? Or was this a bad deal that hurts efforts to control federal spending?

 

President Trump Proposes Tax Reform

 

In late August, President Trump went to Missouri to lay out some broad themes on tax reform. During his speech, he said that he would be disappointed if Congress did not act on this issue. However, passing actual changes to the tax code is much more difficult than outlining a set of principles.

 

With a full agenda consisting of finishing the federal budget and raising the debt ceiling (among other priorities), it will be very difficult to write a tax bill that gains bipartisan support prior to December. But members of Congress have also said that they want to get tax reform done, too.

 

Here are the priorities laid out by President Trump in his Missouri speech:

 

Close loopholes

 

There is broad agreement by tax experts that this would be a good thing. The problem comes in deciding which loopholes to end. Every loophole, or deduction, in the tax code benefits someone; some group lobbied to get that deduction and that group will fight very hard to retain it. Whether these deductions are large ones, such as the home mortgage interest deduction, or small ones, such as the tax preparation fee deduction, members of Congress will face significant opposition to any proposed changes.

 

Lowering tax rates for businesses

 

There is also support for this principle among experts. However, cutting this rate will mean less revenue to the government. If the president does not want to see this tax plan contribute to higher deficits, then that revenue must be made up through raising other taxes or cutting spending.

 

Middle class tax relief

 

This principle is one that is politically popular. However, what type of tax relief? Will this mean more deductions for middle class taxpayers (which contradicts the first goal)? Or will it mean cutting rates for middle class taxpayers?

 

Allowing companies to bring back money held overseas

 

This is a fairly specific principle, in that it would allow U.S. businesses to repatriate foreign earnings. The current tax code taxes companies on the profits they earn overseas if they bring this money back into the U.S. This gives companies an incentive to invest this money outside the U.S. However, there will be resistance to allowing U.S. businesses to repatriate foreign earnings, from people who do not like the idea of giving a tax break for foreign profits.

 

What do you think of the president’s tax reform agenda? Do you think it hits the right points? Or do you think that Congress should pursue other tax reform ideas?

 

Are Sales Tax Holidays Good Policy?

 

It’s back-to-school season, so that means parents are rushing to stores while clutching school supply lists.  In some states, they may get a brief reprieve from paying sales tax on clothes or notebooks. This type of sales tax holiday may sound like a great deal for consumers, but some experts say it is bad policy.


Sales tax holidays are promoted as a way to spur retail sales as well as help families afford necessary school supplies. Politicians in 16 states have enacted these sales tax holidays, and they cover a variety of goods.

 

Bob Peterson, a state senator from Ohio, co-sponsored legislation in that state creating a sales tax holiday this year. He says, “Ohioans saved millions of dollars on back-to-school items during the prior Sales Tax Holidays, and stores saw significant boosts in statewide retail sales.”

 

According to the nonpartisan Tax Foundation, however, these supposed benefits are an illusion. Here are some of the problems with this brief window of tax-free shopping, according to the foundation’s experts:

 

“Most sales tax holidays involve politicians picking products and industries to favor with exemptions, arbitrarily discriminating among products and across time, and distorting consumer decisions… Political gimmicks like sales tax holidays distract policymakers and taxpayers from genuine, permanent tax relief. If a state must offer a ‘holiday’ from its tax system, it is an implicit recognition that the state’s tax system is uncompetitive. If policymakers want to save money for consumers, then they should cut the sales tax rate year-round.”

 

What do you think? Do you support sales tax holidays? Or do you think that these holidays are gimmicks that have no real positive effect?

 

Pennsylvania House Bill 542

 

Check out this key bill voted on by elected officials in Pennsylvania, check-in to the VoteSpotter app to see how your legislators voted, and comment below to share what you think!

 

House Bill 542, Mandate Online Sales Tax Notice: Passed 26 to 24 in the state House on July 27, 2017.

 

To mandate that online out-of-state companies selling to Pennsylvania customers must remind these customers that they owe the commonwealth’s sales tax on goods being purchased. In addition, these companies must send any Pennsylvania resident who spent more than $500 in a year a notice that they owe Pennsylvania sales tax.

 

Comment below to share what you think of Pennsylvania House Bill 542!

 

 

Missouri House Bill 7

 

Check out this key bill voted on by elected officials in Missouri, check-in to the VoteSpotter app to see how your legislators voted, and comment below to share what you think!

 

House Bill 7, Appropriations for the Economic Development, Insurance, and Labor Departments: Passed 115 to 38 in the state House on April 6, 2017. 

 

To spend $301,156,373 for the Department of Economic Development, $43,833,994 for the
Department of Insurance, Financial Institutions and Professional Registration, and $212,298,975 for the Department of Labor and Industrial Relations.

 

Comment below to share what you think of Missouri House Bill 7!

 

 

Colorado House Bill 1222

 

Check out this key bill voted on by elected officials in Colorado, check-in to the VoteSpotter app to see how your legislators voted, and comment below to share what you think!

 

House Bill 1222, Create Family Caregiver Support Fund Tax Check-off: Passed 27 to 7 in the state Senate on April 18, 2017. 

 

To create a family caregiver support fund in the state treasury and, if space on tax forms permits, allow taxpayers to designate tax funds to provide money for the fund. Money remaining in the fund at the end of a fiscal year would go to Easter Seals Colorado.

 

Comment below to share what you think of Colorado House Bill 1222!

 

 

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