Taxes, Debt, Spending

Commentary & Community

Cory Booker: Raise Estate Tax to Fund Opportunity Accounts for Kids


New Jersey Senator Cory Booker thinks that he has a way to address inequality in the U.S. He recently proposed a bill that would establish savings accounts for every child born in the U.S. To pay for these “Opportunity Accounts,” booker would increase a variety of taxes, including the estate tax.


Under Sen. Booker’s plan, every child would receive an “Opportunity Account” at birth, but after that the federal government would provide payments into that account depending on family income. Those with the lowest incomes would receive $2,000 a year. Those with higher incomes would receive a lesser amount. Children in families with incomes over 500% of the federal poverty level would not receive yearly payments. The money in these accounts could not be used until the child turns 18, and then it could only be spent on certain things such as college tuition or a home down payment.


To pay for the estimated $60 billion price tag, Senator Booker’s plan calls on the federal estate tax rate to be set between 45% and 65%. He would also increase the capital gains tax rate.


The idea behind these accounts is to provide low-income Americans with a nest egg that is similar to what wealthier Americans already enjoy. Senator Booker argues that this would allow wealth creation by these lower-income families, especially minorities. Supporters of the accounts contend that past government policies prevented minority families from taking actions that would have allowed them to accrue wealth, so this is a way to help right those wrongs.


Those opposed to Senator Booker’s plan argue that the high estate and capital gains tax will hurt the economy by taxing productive economic activity. They note that people will take action to avoid the very high estate tax rates, so his plan will likely need other sources of revenue to fund it.


Senator Booker’s plan is unlikely to be considered by the Senate. However, if Senator Booker runs for president in 2020, it may provide the basis for a national discussion on what government should do to help low-income families accumulate wealth.


Do you think the federal government should provide tens of thousands of dollars in an “Opportunity Account” for low-income children? Should the estate tax be increase to fund these accounts?

Taxes, Government Reform are Big Issues in Wisconsin Governor’s Race

Democrat Tony Evers is trying to unseat Republican Governor Scott Walker in Wisconsin. He thinks that a key part of his appeal will be changing the way the state government operates, from use of the state airplane to redistricting reform. Governor Walker, however, charges that these reform proposals are a way for Evers to distract voters from his proposals to increase taxes. 


Yesterday Evers unveiled a government reform package that would affect both the governor’s office and the legislature. Among his proposals were these:

  • Redistricting reform: Evers would like to see a nonpartisan commission draw the state’s congressional and legislative boundaries.
  • Economic development reform: Evers would eliminate the Wisconsin Economic Development Corporation, which provides subsidies to businesses. Instead, he would return the state’s economic development programs to the way they used to be run in the Commerce Department.
  • Inspector general: Evers would establish an inspector general to police the state government, but he was not clear on how this post would operate.
  • “Cool off” legislation: Evers proposed a “cooling off” period between the time that legislative committees consider legislation and the final vote on such legislation. He would like to see a 48-hour delay to give the public time to comment on bills.
  • Reduce use of the state airplane: Evers wants to see the state airplane used less, although he did not give details about the circumstances in which the plane should be used.


Governor Walker responded to these proposals by focusing on taxes. He claims that the election of Evers would lead to higher taxes, while Gov. Walker wants to lower taxes. One of the proposals being pushed by Governor Walker is to increase the homestead property tax credit and lower the age at which homeowners would be able to claim it. According to Gov. Walker, this would provide tax relief to homeowners on fixed incomes.


Evers has said that he supports “fair taxes,” but has also indicated he would support an income tax hike for some taxpayers, a higher gas tax, and a repeal of some tax cuts for businesses and farmers. Evers has given no detailed plan on what changes he would make to the state’s tax code.


Do you support giving a property tax break to senior citizens? Should an independent commission draw legislative and congressional district lines?



New Jersey Resumes Subsidizing Filmmakers


The Garden State is back in the film subsidy business. After a hiatus during Gov. Chris Christie’s term, the state’s subsidy program for filmmakers is being resumed. Proponents hail this as a way to jump-start New Jersey’s film industry, while critics paint it as a handout to wealthy film companies.


Governor Christie disliked film subsidies and worked with legislators to discontinue them when he was in office. The new governor, Phil Murphy, came into office stressing a variety of differences with Christie. Film subsidies is one of them. He recently signed a bill into law that revives state tax credits for film companies.


Under this legislation, the state can offer $85 million a year in tax credits to companies engaged in film production. For companies operating in northern New Jersey, they can receive a tax credit equal to 30% of their qualified production expenses. Companies in southern New Jersey will receive a credit of 35%. Digital media are also eligible for these credits, but at a 20% or 25% rate. Companies with a diversity program can receive even more state aid.


These credits will be applied against a company’s tax liability. Unlike in some states, these credits are not refundable – that is, a company will only receive them if they have a tax liability. Some states provide “tax credits” even if companies do not owe state taxes, essentially turning the credits into payments by the state to the production companies. The New Jersey credits will be transferable, however, meaning that production companies that don’t use them can sell them to other companies that do owe taxes.


Gov. Murphy and legislators who support this tax credit program say that it is vital to attracting film production to New Jersey. They say that other states offer companies these credits, so New Jersey must do so, too, if it wants to have a strong film industry. Opponents point to numerous academic studies that conclude these subsidies produce little in the way of new jobs or long-lasting economic impact. They say that these subsidies are nothing more than corporate welfare for out-of-state companies that are not struggling economically.


This tax credit program will last for five years, then it must be renewed by the legislature.


Do you support states giving tax credits or other subsidies to film companies?


Wisconsin Will Collect Internet Sales Taxes, May Reduce Income Tax


The U.S. Supreme Court ruled in June that states can begin collecting sales taxes on Internet purchases. Soon after this ruling was announced, Wisconsin Governor Scott Walker said that his state would do so beginning in October. As a result, the state’s income tax rates may be going down.


In Wayfair v South Dakota, the high court held that a state could charge sales taxes for items purchased online from out-of-state sellers. A previous court decision said that states could not impose a tax on purchase made by their residents from out-of-state companies, but this ruling occurred prior to the widespread use of the Internet.


Many states, including Wisconsin, had long desired to tax these purchases but were held back by the earlier Supreme Court ruling. With the court changing direction, Wisconsin is embracing its opportunity to tax online sales. Governor Scott Walker says that this will not be a tax increase but will merely be treating all sales fairly, regardless of whether they are made in-person or online.


A 2013 state budget provision held that if the state began collecting online sales taxes, then the state’s income tax will automatically be cut to offset the new income. It is unclear how this provision will be implemented, but legislative leaders say they are willing to work with the governor to cut the income tax rate in response. One study of the potential effect from taxing online sales concluded that Wisconsin could see as much as $187 million a year in new revenue.


Do you support states collecting sales taxes on purchases made online by state residents?


California Soda Tax Ban Saves Local Taxing Powers


Governor Jerry Brown signed a bill in late June banning local governments from imposing soda taxes, but he was not happy about it. Many legislators who supported the bill were not very keen on it, either.


So why are soda taxes now banned in the Golden State? It all has to do with preserving the ability of local governments to raise taxes. The beverage industry was pushing a statewide initiative that would have made it more difficult for local governments to increase all taxes and many fees. In return for a ban on soda taxes, the beverage industry withdrew the initiative.


The initiative being proposed would have required that any local governmental body seeking to increase taxes and certain fees could only do so through a two-thirds vote. Then such a tax increase could only go into effect if it was approved by two-thirds of the voters. Any tax increase that would have been proposed under the state’s initiative system would also have had to receive approval by two-thirds of the voters under this proposal.


Governor Brown and legislators did not like such restrictions on local governments’ taxing power. They worked with the beverage industry to craft a compromise measure that would end the threat of local soda taxes. Prior to the law being signed, four municipalities in the state imposed such taxes.


Some legislators were glad to see the soda tax ban, but were displeased that such a ban would short-circuit the larger tax limitation measure. They said that this compromise bill ignored the voices of the more than one million Californians who signed petitions to place the tax limit measure on the ballot.


Those supporting the compromise bill said that the tax limit initiative would have crippled local governments’ ability to raise revenue. They said it was better to stop soda taxes rather than impose new limits on how local governments can increase other taxes.


Do you agree with California banning soda taxes? Should local governments be required to get approval from two-thirds of voters before they increase taxes or fees?


Congress Acts to Rescind $15 Billion in Spending


In Washington, Congress appropriates or authorizes money and the president has the authority to spend it. Or that is how it generally works. President Trump, however, has decided to exercise a little-used presidential power and ask Congress to reverse itself on spending.


In early May, President Trump’s budget director sent a letter to Congress asking it to rescind $15.4 billion in spending that the legislative branch had appropriated or authorized. This funding includes:

  • $5.1 billion from the Children’s Health Insurance Program (CHIP) that was never requested by states before the authorization to spend it expired on September 30, 2017
  • $4.3 billion from the Advanced Technology Vehicles Manufacturing Loan Program, a loan program that is no longer being used
  • $523 million from a loan program that was authorized under the Obama Administration stimulus package
  • $133 million from the Railroad Unemployment Insurance Extended Benefits program, which expired in 2012


The authority to request these rescissions is authorized under the 1974 budget law that governs the federal spending process. Under this law any member of Congress can introduce a bill to enact the president’s proposal, and Congress has 45 days to act. If it does not act, then the president’s proposal dies. The last time a president requested a rescission was President Bill Clinton in 2000.


On June 7, the House of Representatives passed HR 3, the Spending Cuts to Expired and Unnecessary Programs Act, by a vote of 210-206. This bill contains the rescission requests made by President Trump. The Senate Appropriations Committee is now considering this bill. Senate Majority Leader Mitch McConnell has said that he supports the president’s rescission request. Even with the slim Republican majority in the Senate, this bill is likely to pass if it is acted upon within the 45-day limit.


Do you support President Trump’s proposal to rescind $15 billion in federal spending? Or is the president being unfair in rescinding funding for children’s health insurance?


Gov. Cooper: Raise Taxes and Increase State Employee and Teacher Pay


Thousands of teachers marched on the state capitol in Raleigh to greet North Carolina legislators as they started deliberations in mid-May. Their demands for higher pay found an ally in Democratic Governor Roy Cooper. His budget proposal would give teachers and state workers a salary increase. To pay for these plans and other spending hikes, he wants to cancel a scheduled tax decrease. The Republicans who control the legislature have other ideas.


Under Governor Cooper’s budget proposal, teachers would see a pay increase of 8%. The current budget provides a 6% pay increase for these teachers. The governor is also proposing a pay increase for state employees of 2% or $1,250, whichever is higher. State law enforcement officers would receive an additional $1,000 pay increase on top of that.


This would be paid for by halting some tax decreases that were passed in 2013. Instead of lowering the tax rate to 5.25% on households making income over $200,000, the governor wants to keep that tax rate at 5.499%. He would also like to cancel the tax rate decrease on corporate incomes.

Governor Cooper points out that North Carolina teacher salaries are below the national average. He says that with federal tax cut legislation, there is no longer a pressing need for all of North Carolina’s scheduled tax cuts to take effect.


Republican legislative leaders are wary of canceling tax decreases, pointing out that this would really be a tax increase for those who were scheduled to receive them. They say that they would like to help teachers, too, and are looking at using state money for one-time bonuses. Some legislators charge that the governor is using this issue as a political stunt in an election year.


Whatever legislators pass in the budget bill, it is subject to Governor Cooper’s veto.


Do you think that scheduled tax decreases should be stopped in order to give North Carolina teachers a raise of 8%?


Iowa Governor Candidates Take Aim at Tax Credits


The Democrats running for governor in Iowa have a lot of differences, but there is one thing they agree on – limiting the tax credits that go to businesses.


Like many states, Iowa offers a variety of tax credit programs that benefit business owners. These programs give a credit against taxes paid if businesses meet certain criteria. In some programs, the tax credits paid by the state can exceed the amount of taxes paid by the business.


These programs are touted as an economic development tool. Their supporters say that they are necessary to bring companies to the state. They are also used as a way to give incentives for companies that meet goals favored by politicians, such as pay certain wage rates.


Critics say that tax credits are merely corporate welfare under another name. The programs, these observers point out, are really state money being paid to businesses. They take money that could go to other services and instead give it to private corporations.


The candidates seeking the Democratic gubernatorial nomination largely focus on that last point. They propose ending some or all of these tax credit programs and using the new revenue for education and other public services.


While all the candidates support reforming the state’s tax credit programs, one of them – Fred Hubbell – served on the economic development board that allocated tax credits. His opponents attacked him for his work in that position, while Hubbell said that he tried to focus tax credits on progressive goals.


The state’s primary election is June 5.


Do you support tax credit programs that provide funds for private businesses? Are these programs a necessary way to create jobs in a state or are they corporate welfare that diverts tax money from public services to wealthy business owners?


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



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.




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?




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 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 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?


Copyright © 2018 Votespotter Inc. All rights reserved.